How rack pricing turns into your margin
Every gallon you sell starts life as a number posted at a terminal. Understanding how that number becomes the price on your sign, and how much of the difference you keep, is the single most useful piece of fuel math a station owner can do. The calculator above does the arithmetic; this section explains the pieces. For the full treatment, including what happens to liability when you take title at the rack, read our pillar guide to rack pricing and terminal gate fuel costs.
What is a rack price?
The rack price is the wholesale price a terminal posts for a specific product, grade and location. It is quoted per gallon, it excludes freight, and at most terminals it excludes federal excise tax and state taxes as well. Jobbers buy at the rack; branded dealers usually buy from a jobber or directly from a supplier at rack plus an agreed differential. Because the rack is the base of every other number, a change of a few cents at the terminal shows up in your delivered cost the same day.
What is a terminal gate price?
Terminal gate price and rack price describe the same thing from a slightly different angle. The gate is the physical point where product leaves the terminal on a transport truck and ownership transfers. Everything added after the gate — freight to your site, your supplier's differential, and the taxes collected on the load — is what separates the posted terminal number from the delivered cost on your invoice. The calculator's waterfall bar shows exactly where those cents land.
Branded vs. unbranded rack
Terminals typically post two racks for the same tank of gasoline: a branded rack for product sold under a major's flag, and an unbranded rack for the same base product without the brand's additive package and image requirements. Branded rack is usually higher, and in exchange the dealer gets the brand, the credit card program, and often supply security during tight markets. Unbranded is cheaper on the posting but leaves you exposed when supply gets short. Which is better is a volume and location question, and the answer changes over time — which is why the product selector and rack field are at the top of the tool.
What a normal differential looks like
The differential is the supplier's markup over rack, and there is no published market rate. It depends on brand, contract term, volume commitment and how much competition your jobber faces in your area. Many single-site operators see differential plus freight land in the low single digits of cents per gallon. When the combined figure creeps above 8 cents, the tool flags it, because above-market differentials are the most common hidden margin leak we see on single-site P&Ls. Pull three months of invoices, average the differential, and compare it against your contract before you renew.
Why rack prices reset daily
Rack postings follow the spot markets for gasoline and diesel, which move every trading day with crude, refinery outages, pipeline schedules and seasonal specification changes. Most suppliers publish a new rack each afternoon, effective at a set time, and some reprice intraday when the spot market moves sharply. Your street price cannot follow every tick, so your margin expands and compresses between repricings. Running today's rack through the calculator each morning takes a minute and tells you whether your sign is still covering your breakeven.
Card fees change your breakeven
One subtlety the tool handles for you: card fees are a percentage of the street price, so raising your price raises the fee. That is why breakeven is not simply delivered cost plus taxes. The calculator solves for the street price at which margin is zero after the fee, using your blended processing rate and the share of transactions paid by card.