Revealing the Earnings: How Much Does an LPG Gas Dealership Make?

The number of active liquefied petroleum gas customers across India is over a million. The Pradhan Mantri Ujjwala Yojana, with the objective to provide cleaner fuel, has brought a revolution to both urban and rural Indian households. Thus, to meet the ongoing demand of consumers, the number of LPG gas distributors is also on the uprise. Owning an LPG gas dealership is a popular business idea for those looking for a high profit margin. 

However, when it comes to revenue, you need to understand that the profit may vary from distributor to distributor. There are certain facts that can impact your earnings. This blog explores the factors, challenges, and revenue streams of LPG gas dealers. Let’s have a closer look:

Factors That Influence Earnings of LPG Gas Dealership

1. Location and Demand

We can never ignore the location and demand when planning to apply for an LPG gas dealership. If you’re from an area with high population density, then it’s only natural to have a high demand. However, you should also keep an eye on the number of competitors your area has and whether they are operating under the same brand you’re planning to apply for when doing market research.

 2. Type of Dealership 

You can either go to a public or private LPG gas distributorship. In the present day, the popularity of private gas dealerships is increasing as they offer reliable services and flexible delivery options, along with competitive pricing. 

Liquefied petroleum gas in India is used for both domestic and commercial usage. You can opt for either of these options. At SHIVGAS, you can apply for an LPG Gas dealership for both franchises by filling out a simple form.

3. Brand Association and Support

Whether it’s purchasing clothes or gas, customers prefer a brand that they’re familiar with. Collaborating with a popular brand increases your chances of gaining a higher revenue.

SHIVGAS has been in the LPG industry for 30 years, never compromising on the quality and quantity to meet the customers unique needs. We offer 17kg and 21 kg LPG gas cylinders for commercial and residential usage. You can own our LPG gas dealership to supply industrial needs, which comes in 33 kg LOT, 33 kg VOT, and 425 kg.

4. Operational Efficiency

Let’s say a family was cooking dinner, and suddenly the gas ran out? Would they be happy to hear they have to wait for a whole day or two? How sincere you are about meeting your customer's demands helps you win over the customer's trust. So, even if there are other competitors, they will come back to you. 

Challenges That Impact Profitability OF LPG Gas Dealership

Like any other business, becoming an LPG gas distributor also comes with its own set of challenges. Following are the common challenges that business owners suffer from the most:

• Regulatory Compliance and Licensing: Safety is the most important factor when dealing with liquefied petroleum gas. There are unified guidelines for LPG distributorship that you need to comply with to obtain required licenses and permits.
• Infrastructure and Investment Costs: A good infrastructure allows dealers to safely store the gas cylinders and transport and distribute them efficiently. However, the infrastructure and initial investment cost can be a few lakh rupees or more depending on the distributorship, location, and other factors. So, it’s better to do thorough research. 
• Competition in the Local Market: Entering the local market with an already existing distribution network can be difficult. It is harder to make a name of your own and gain trust from customers in a market with competitors offering the same products for years. 

What are the revenue streams for an LPG gas dealership?

The demand for LPG gas cylinders in India for residential and commercial purposes has grown exponentially since the last decade. As an LPG gas distributor, you can earn incredible profits through various means, such as

1. Commission fees 

Owning an LPG gas dealership allows you to gain commission fees on the number of cylinders you have sold. Though the amount may change due to the type of distributorship (government or private), cylinder usage (for industrial or domestic purposes), location, etc. 

2. Selling in bulk

Rather than selling single cylinders to individual sellers, many dealers prefer selling in bulk. For example, restaurants, hotels, and other industries need a large amount of LPG gas cylinders. So, they prefer to buy in large quantities. Building a strong relationship with them can help you source a constant source of income. 

3. Ancillary Services and Products

For first-timers, buying a cylinder is not the only thing; they also need an oven and other appliances. LPG gas dealers can use this to their advantage to promote gas stoves, regulators, hoses, and other relevant appliances.

You may also like: 5 Strategies to Reduce Fuel Costs with Industrial LPG

Final Thoughts

The LPG gas dealership market in India is currently a profitable business initiative. However, like any other business, it also comes with a few challenges. But with the right strategy and detailed research, you can create a prominent customer base and gain revenue in 6 digits per month. 

FAQs 

Q.1. What are the basic criteria to own an LPG gas dealership?

If you’re planning to apply for an LPG gas distributorship, here are the following requirements you need to meet:

• Applicants must be citizens of India.
• They should at least have passed 10th or have an equivalent qualification from a recognized board. It is not applicable for those belonging to the Freedom Fighter (FF) category.
• They should be within the 21-60 years age range. 
• They cannot have a tie with family members or an employee of the OMC (oil marketing company).

Q.2. How much will I earn monthly from the dealership?

As we’ve mentioned, the exact amount may change depending on various reasons. Factors like locality, demand, competition, and type of dealership can impact your sales and revenue. 

Q.3. Should I go for government or private LPG gas distributorship?

Both government and private LPG gas dealerships come with several pros and cons. Explore our blog on government vs private agencies to get a better understanding.