Introduction to contingent pricing

Contingent prices update automatically by leaning on your supplier's product price.

Another option for creating prices on Gasology is Contingent Pricing. Instead of building prices all on your own that you will need to update manually, you can create prices that lean on your supplier’s price and update automatically.

Contingent pricing is a method for pricing products for sale on the Gasology platform, where any type of fuel merchant (other than the one physically refining and creating the product) can lean on their connected supplier’s price as the basis for their own product price. When your supplier’s price updates, your product price - the price your customer sees - instantly updates, too.

Contingent threads

A string of dependent pricing relationships between connected sellers and buyers constitutes what is known as a contingent thread. Contingent threads are the foundation of contingent pricing on Gasology.

Contingent threads may consist of one product originator, one merchant (known as a contingent seller) buying from that originator, and the end-user they are selling to. A contingent thread can also comprise more parties, with each merchant buying from their suppliers. Any number of merchants can participate in contingent pricing as long as there are a product originator and a final customer for the transaction.

One example of a contingent thread is a transaction with diesel moving from a refinery to a distributor, to a truck stop, and finally, a driver. In this contingent thread, the refinery (product originator) allows the distributor to use the refinery’s price as the basis for the distributor’s product price. The fuel station then uses the distributor’s price as the basis for their fuel price. When the final customer purchases fuel at the fuel station, the price they pay is based on the current price the distributor is offering the truck stop, which is based on the current price the refinery is offering the distributor.

When a final consumer (the driver) makes their reservation, the prices for all three merchants are locked for 30 seconds to eliminate spread risk for all parties. When the driver clicks “Buy,” fuel is instantly and simultaneously reserved between each party in the transaction thread.

The graphic below summarizes the contingent pricing relationship:

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More on Originators and Contingent Sellers

Originators

A merchant who creates or refines the product they’re selling is known as an originator on the Gasology platform. Merchants who hold inventory for sale are also effectively originators. When designing base prices, a merchant can designate themselves as a product originator or contingent seller for each individual product they sell.

Any merchant selling a product as an originator cannot use contingent pricing for that product.

Customers may use an originator’s product price as the basis for their product prices when selling to other customers further down the supply chain but require the originators on platform approval to do so. Merchant’s will grant approval by assigning approved customers to their purpose-built program and structure combinations with contingent pricing.

When an originator creates a price using the Price Design manager, the price of their product will use a price index they have created. This price index will be updated manually or via Excel by the merchant as needed.

Contingent Sellers

Contingent pricing is a tool for merchants who would like to base their product price on the price their supplier is offering. Typically, these merchants are terminals, distributors, fuel stations, and final mile delivery companies.

Instead of those merchants basing their price on static indexes they create and update manually, they can base their price on the offered price they receive from a supplier by selling contingently. Once set up, the contingent seller’s price updates automatically on the platform as often as their supplier’s price updates.

Up next

For information on how to create and set up a contingent price, click here.

If you would like to offer contingent sales to your connected buyers, click the link for more information on how to set up a structure enabling contingent pricing for your buyers.