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How businesses can save money on their energy costs

Published: 30 May 2018 - Sarah Mead

We all need it and we all complain about how much the prices continue rising taking a chunk out of our business’s profit margin. As a small business owner every penny counts and we justifiably begrudge paying more for the same product. As with domestic fuel you can shop around for better gas and electricity prices too. But time is money and you might be thinking ‘is it worth me taking the time compared to the savings I might get?’ Well the bottom line to this is a big ‘Yes!’ And if you haven’t switched recently then there are even bigger savings to be had. Interested? You should be!

Differences with domestic and business energy

Unlike domestic energy deals, business energy customers have two important differences to consider. The first is that the tariffs vary depending on your haggling skills. Domestic energy is regulated by Ofgem so no amount of haggling will cut you a deal on energy companies’ tariffs. The second is that there are no dual-fuel discounts – you need to haggle over the best deal for each. But, of course, you can use the prospect of giving an energy company the trade for both to aid your bargaining position.

Factors influencing your business energy prices

Your bill is made up of standing charges (a fixed, daily price like telephone line rental), day and weekend rates (unit prices that vary depending on the day of the week) and other contributing factors like feed-in tariffs (a scheme that uses electricity you generate and supply back to the National Grid). The tariff prices you get quoted will also depend on your credit score, consumption, business location and even the type of business you run. Before all this puts you off, read on to see how you can mitigate against the red tape and cut through the minefield of complications.

Making progress with saving your business money

We started by saying that it’s worth your time comparing prices but followed that up with the scenario of contacting many suppliers for both gas and then electricity and the inevitable haggling.  It’s not sounding so inviting now but that’s where an energy website like Troocost.com comes to your rescue. There used to be three options where energy was concerned. You could just renew your contract (easy but not cheap), do the legwork and research yourself (time-consuming but good for the best deals) or use an energy broker (quite easy but you’re not getting the best prices and you’ll be paying commission). Troocost.com uses a different approach, Business Energy Benchmarking – they take your quote and compare it to the baseline prices of rival energy companies. You will find out whether you are on a good deal or how much you could potentially save by switching. Troocost.com doesn’t add commission to the prices; we get paid by a flat fee by the energy companies to feature their best prices to compete for your business.

What savings could I make?

This is the million-dollar question and one that you should always ask! As the energy prices are quoted on a specific business-by-business basis, comparisons across the industry are not easy to make. One thing that is pretty certain is that if you haven’t switched or tried to haggle for a better deal recently then you are likely to be paying over the odds for your energy. Considering that a report published by the Competitions and Markets Authority a couple of years ago discovered that 40% hadn’t switched in five years and 39% said they had never switched, indicates that there are many companies who could benefit from revisiting their rates. In financial terms small businesses spend over £9,000 on their energy annually and anecdotal evidence suggests that switching can save you between £500 and £1,000 per year!

Haggling is expected

First off, get your bills and find out what your standing charges and unit rates are. Comparing quotes based solely on your monthly or annual consumption aren’t likely to be as accurate as ones with the individual charges. Don’t be afraid to mention rival companies’ quoted rates at the providers. They all want your business and will try and undercut as much as possible. Their sales reps expect to work for their commission so don’t make it easy for them; you can both come out happy with a good deal. If you’re a new business you may be surprised to learn that there is no cooling-off period on contracts. Once you’ve approved a contract there is no backing out so don’t make any rushed decisions.

Summary

So there you have it: some great incentives to revisit your energy bills and the best ways to shop around to see how much you could save. Do a bit of homework and the result could be very rewarding, after all you work hard for your money, it’s only right that energy companies should do too.



 
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