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First, regarding inflation surcharge, well that's the norm in business contracts. I can't recall ever reading a business contract that didn't have an indexation

First, regarding inflation surcharge, well that's the norm in business contracts. I can't recall ever reading a business contract that didn't have an indexation clause. Regarding other surcharges e.g. fuel, I would say, to be fair to Amazon, that they are coming late to a game that has been going for a while now. Once in a while, I get a phone call from $well_known_international_shipping_company trying to lure my business away from their competitors. Shipping salesdroid sends me a nice Excel spreadsheet showing the breakdown of all the nice cheap shipping rates for various weights and destinations. All designed to make you think "that looks awesome, where do I sign". But for the last few years or so, the spreasheet has changed to include some small-print at the bottom "A fuel surcharge will apply to the Rates, calculated in accordance with the methodology at $url unless otherwise specified in the Rates, $shippingCo may from time to time elect to revise its fuel surcharge table".

spookthesunset 5y ago
It does make a bit of sense to break a (relatively) wildly changing cost like fuel out of the fixed portion of the contract. No way does the vendor want to assume the risk of fuel prices going through the roof and being forced to eat into their margin. At most they should share that risk with the customer—it isn’t like the vendor or the customer has much control over fuel prices.
- DavidPeiffer 5y ago
  > It does make a bit of sense to break a (relatively) wildly changing cost like fuel out of the fixed portion of the contract. Totally agree. Interestingly as a consumer, the only time I've seen this is on my garbage collection when I moved to a new city. I've seen contracts arranged as "Market index price per pound of $commodity plus _x_ per pound for processing". If you're worried about costs varying significantly, you can go hedge the commodity. I've also heard of "transportation costs paid by supplier up to _x_, with all costs in excess split 50/50 with the customer" as a way of keeping incentives aligned but sharing risk.

spookthesunset 5y ago

It does make a bit of sense to break a (relatively) wildly changing cost like fuel out of the fixed portion of the contract. No way does the vendor want to assume the risk of fuel prices going through the roof and being forced to eat into their margin. At most they should share that risk with the customer—it isn’t like the vendor or the customer has much control over fuel prices.

DavidPeiffer 5y ago
> It does make a bit of sense to break a (relatively) wildly changing cost like fuel out of the fixed portion of the contract. Totally agree. Interestingly as a consumer, the only time I've seen this is on my garbage collection when I moved to a new city. I've seen contracts arranged as "Market index price per pound of $commodity plus _x_ per pound for processing". If you're worried about costs varying significantly, you can go hedge the commodity. I've also heard of "transportation costs paid by supplier up to _x_, with all costs in excess split 50/50 with the customer" as a way of keeping incentives aligned but sharing risk.