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.
> 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.
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.