Fixed per litre, not a share of the price
The retail price is set by the oil marketing company and so is the price the dealer pays. The gap between them is the dealer commission: a fixed number of rupees and paise on every litre, revised occasionally, and the same whether the pump price that fortnight is high or low.
That is the whole of the fuel business, and it has a consequence people find genuinely counter-intuitive. A price rise does not make the outlet richer. If commission is fixed per litre, a ten-rupee increase in the retail price adds nothing to margin. What it does is increase the money tied up in every tanker load — the same litres now cost more to buy, so working capital goes up while earnings stay flat. A price rise is, for a dealer, a cash-flow event rather than a good one.
It also means margin cannot be improved by selling the same fuel harder. There is no price to raise and no discount to withhold. Volume is the only lever on gross margin, and every fixed cost the outlet carries has to come out of commission on litres already sold.
What that fixed amount has to cover
Commission per litre is not profit per litre, and treating it as one is the most common error in a business plan for a new outlet.
Out of it come salaries, electricity for the canopy and the dispensers, maintenance, statutory costs, rent or the opportunity cost of the land, the interest on the fuel sitting in your tanks, and evaporation — fuel bought and never sold, which never appears as a payment and so gets left out of almost every estimate.
- Evaporation is a direct cost at what you paid, not at the commission you would have earned. It scales with volume, so it reduces what each additional litre contributes rather than sitting alongside rent as a fixed cost — which is why break-even volume is always higher than a naive calculation suggests.
- The interest on stock is real even when nothing is borrowed. A tanker load is paid for before it is sold, and that money is not earning anything else.
- Petrol and diesel do not carry the same commission, so a change in your product mix changes your blended margin without anything else changing.
- The profit calculator takes your own figures and works out what actually survives. The payback calculator does the same for a site you have not opened yet.
Why no figure is quoted here
Commission is set by the oil marketing companies, differs between petrol and diesel and between company and site type, and is revised. Any number printed on this page would be wrong somewhere and stale everywhere. Take yours from your own purchase and selling price for the same litre, blended across the grades you actually sell.
The half of the business that is not fuel
Because fuel margin is fixed and volume is largely a function of the site rather than of anything an owner does day to day, the part of the outlet an owner genuinely controls is usually the part that is not fuel.
Lubricants, a shop, air and water, a service bay, space let to an ATM — these carry ordinary margins that you set, not handed-down ones. On many outlets they are the difference between a thin profit and a real one, and unlike fuel they respond to effort. They also sit inside GST while the fuel does not, which is its own complication worth understanding — see GST at a fuel outlet.
None of that changes the arithmetic of the fuel side. It changes what you do about it.
Frequently asked questions
How much commission does a petrol pump get per litre?
It is set by the oil marketing companies, differs by product and by company, and is revised periodically — which is why this page quotes no figure rather than one that will be wrong. Take yours from your own invoice and selling price for the same litre. What is stable is the shape: a fixed amount per litre, not a share of the price.
Does a petrol pump earn more when fuel prices go up?
No, and it usually earns the same while needing more cash. Commission is fixed per litre, so a higher retail price adds nothing to margin — but the same tanker load now costs more to buy, so working capital rises. For a dealer a price rise is a cash-flow event, not a windfall.
Is commission higher on petrol or diesel?
They differ, and by enough that a shift in your product mix changes your blended margin on its own. Work out your own for each grade and blend them by the volumes you actually sell, rather than using a single figure for the outlet.
Why is my break-even volume higher than I calculated?
Almost always because evaporation was left out. It scales with volume, so each extra litre contributes commission minus its share of loss rather than the full commission. Dividing fixed costs by gross commission gives a break-even the outlet can never actually reach.