Customers that live in deregulated markets have the option to choose their energy supplier and find the plan that is best suited to their needs. Having the option to shop around and choose a new supplier is a great way to save money and get better service.
New energy customers have many options so it can be hard to know what is the right choice. Which is why customers need an energy broker. As a broker, you help your customer make sense of the various pricing alternatives so they can find the best deal.
As you begin looking at offers from various suppliers, you’ll notice there are generally three different pricing structures: fixed, variable, and indexed. Let’s look at some of the benefits and drawbacks of each.
Fixed rate plans are a popular option for many customers simply because there are no surprises. The customer pays the same amount every month regardless of what the market does. And the price will stay the same for the length of the contract.
However, this also means that customers can’t take advantage of a sudden price drop. Contracts usually last for at least two years and can be pricey to break.
Fixed pricing is a good option for customers that need stable pricing due to budget constraints. If they are renegotiating their contract, let them know that the best time to sign a new one is in early spring.
Variable & Indexed Pricing
Variable-rate plans are based on the wholesale price of energy so they change every month. They are a good option for customers who don’t want to commit to a long-term contract. Because these plans are month-to-month, customers can jump ship at any time without any cancellation fees.
However, customers have no guarantees on monthly pricing. So variable pricing isn’t ideal for customers that can’t manage a sudden, unexpected price increase. When you are researching different plans to recommend, check with different suppliers to find out what their average pricing is for variable-rate plans.
An indexed rate is like a variable rate in that it can change monthly. However, indexed rates are directly tied to market index pricing, so the rate will rise or fall as the index rises or falls.
Finding the Best Plan for Your Customers
Every customer’s needs will be different so there is no best plan for everyone. For customers that need a lot of stability and don’t have much wiggle room in their budget, a fixed plan will be their best bet. For customers that are okay dealing with the natural market fluctuations, variable or indexed pricing may be the right choice.
There are many factors that influence energy pricing and your customer’s location will play a role in the type of pricing you recommend. If they live in a state with steady temperatures year-round, variable pricing may be a good option. On the other hand, this would be more of a gamble in a city like Boston where the temperatures can fluctuate dramatically depending on the season.
Fortunately, you don’t have to figure out all of this out on your own. At Broker Online Exchange, we give you access to top energy suppliers and we provide business support and technology to make your job easier. This will leave you well prepared to find the right plans for your customers and close more deals.
If you are interested in learning more about partnering with BOX, get in touch so we can answer any questions you might have. We help both aspiring and experienced brokers take advantage of new opportunities for business growth.