4 ms·

Buddy ran a gas station in the cities for a while and within reason and the law (MN has some rules), he would mostly change his price based on the price of a st

Buddy ran a gas station in the cities for a while and within reason and the law (MN has some rules), he would mostly change his price based on the price of a station near him. That generally went with the price he should be charging based on what they were buying it for. I sometime think he just thought price wars were fun. I guess having an electronic price sign tends to embolden you when your competitor still has to flip it manually. The reservation gas station prices theirs at $0.05 lower than the next town overs gas. They all pretty much buy it at the same price and the profit is on the inside of the store not the gas pump.

excalibur 10y ago
I used to work at a gas station (that no longer exists) where we would get phone calls several times a day. The unidentified caller would ask what our price was, ask what the price was at the gas station across the street, and tell us what to set the price to. Basically anybody could have called that place and set the price to whatever they want (within certain limits of sanity, $0.25/gal or $30/gal probably would have prompted some additional phone calls).
- refurb 10y ago
  Same here. We'd get a call informing us of a price change. The station I worked at typically followed the price movements of a station down the street.
slantyyz 10y ago
A friend of mine bought a gas station franchise for a major oil company (in a very large city, I might add), and he'd basically do the same. His price intelligence system is pretty low tech - it involves him hopping in a car and seeing what his local competitors are charging.
- bryondowd 10y ago
  I used to work at a Wawa gas station where the manager would occasionally send someone out to check the station down the street and make sure we were still undercutting them by a few cents. I assumed that was pretty standard in the industry.
  - bmelton 10y ago
    Which is funny to me, because Wawa has a few, very effective means of ensuring customer loyalty. Between state-minimum priced cigarettes (for smokers), fee-less ATMS, the awesome, cheap coffee bar, and pretty darn reasonable rates on their hot, prepared food items, I usually prioritize going to Wawa in every circumstance possible, even if gas prices aren't the absolute lowest. I remember when I moved to the Maryland area, hearing everybody rave about what sounded like the dumbest named convenience store I'd ever heard of, and how convinced I was that I'd never fall into that cult of weirdness, but they proved to be too convenient in too many ways for me to ignore them, and now I'm a devoutly loyal Wawa customer.
    - toomuchtodo 10y ago
      In Florida. Absolutely love Wawa. They're wonderful.
  - slantyyz 10y ago
    Funny -- being a Canadian, my first interpretation of your experience was that you worked at a gas station in Wawa, Ontario. Had to look it up before realizing it's actually the name of a company in the US.
rhino369 10y ago
My mom and dad used to work at a company that owned about 100 gas stations. They had a guy who drove around all day just checking prices. And other guy who is the meat space equivalent of this algorithm. They came up with some baseline rockbottom pricing base on how much they paid for the gas. They'd try to price it based on competition. But you can't just price it at the competition. You have to consider other factors. If the station accross the street has a better location (easier access to the road is common, in a parking lot with other stores) then you have to be lower to get business. People will cross the street for 2 cents, but they won't for no difference. If you have a big spread in the rock bottom and competition, it might be worth lowering to gain more business. But you never made much money on the fuel itself. You made the profit on cigarettes, lotto, soda, and snacks. The company made more money with low gas prices. Sounds odd. But people get angry at the gas station owners when prices is high, even though they are taking at most 10 cents a gallon profit, usually way less. So they are less likely to spend money at the convenience store. The company ended up selling all the stations off. You can't run them like a business now that most are run by families without steeply discounted labor. My father in law did that for 10 years. Never turned a profit, ended up handing the station back to the franchisee for free rather than continuing. It's a cutthroat business. I wouldn't want to be a part of it.

excalibur 10y ago

I used to work at a gas station (that no longer exists) where we would get phone calls several times a day. The unidentified caller would ask what our price was, ask what the price was at the gas station across the street, and tell us what to set the price to. Basically anybody could have called that place and set the price to whatever they want (within certain limits of sanity, $0.25/gal or $30/gal probably would have prompted some additional phone calls).

refurb 10y ago
Same here. We'd get a call informing us of a price change. The station I worked at typically followed the price movements of a station down the street.

slantyyz 10y ago

A friend of mine bought a gas station franchise for a major oil company (in a very large city, I might add), and he'd basically do the same. His price intelligence system is pretty low tech - it involves him hopping in a car and seeing what his local competitors are charging.

bryondowd 10y ago
I used to work at a Wawa gas station where the manager would occasionally send someone out to check the station down the street and make sure we were still undercutting them by a few cents. I assumed that was pretty standard in the industry.
- bmelton 10y ago
  Which is funny to me, because Wawa has a few, very effective means of ensuring customer loyalty. Between state-minimum priced cigarettes (for smokers), fee-less ATMS, the awesome, cheap coffee bar, and pretty darn reasonable rates on their hot, prepared food items, I usually prioritize going to Wawa in every circumstance possible, even if gas prices aren't the absolute lowest. I remember when I moved to the Maryland area, hearing everybody rave about what sounded like the dumbest named convenience store I'd ever heard of, and how convinced I was that I'd never fall into that cult of weirdness, but they proved to be too convenient in too many ways for me to ignore them, and now I'm a devoutly loyal Wawa customer.
  - toomuchtodo 10y ago
    In Florida. Absolutely love Wawa. They're wonderful.
- slantyyz 10y ago
  Funny -- being a Canadian, my first interpretation of your experience was that you worked at a gas station in Wawa, Ontario. Had to look it up before realizing it's actually the name of a company in the US.

rhino369 10y ago

My mom and dad used to work at a company that owned about 100 gas stations. They had a guy who drove around all day just checking prices. And other guy who is the meat space equivalent of this algorithm. They came up with some baseline rockbottom pricing base on how much they paid for the gas. They'd try to price it based on competition. But you can't just price it at the competition. You have to consider other factors. If the station accross the street has a better location (easier access to the road is common, in a parking lot with other stores) then you have to be lower to get business. People will cross the street for 2 cents, but they won't for no difference. If you have a big spread in the rock bottom and competition, it might be worth lowering to gain more business. But you never made much money on the fuel itself. You made the profit on cigarettes, lotto, soda, and snacks. The company made more money with low gas prices. Sounds odd. But people get angry at the gas station owners when prices is high, even though they are taking at most 10 cents a gallon profit, usually way less. So they are less likely to spend money at the convenience store. The company ended up selling all the stations off. You can't run them like a business now that most are run by families without steeply discounted labor. My father in law did that for 10 years. Never turned a profit, ended up handing the station back to the franchisee for free rather than continuing. It's a cutthroat business. I wouldn't want to be a part of it.