What is Broker Commission, and Why Does It Matter?
When managing your business energy costs, broker commissions could be adding hidden expenses to your contract. Brokers often include their commission in your energy unit rate, and while it may seem small, those extra pence per kWh can cost your business thousands over the length of a contract. With broker commissions sometimes reaching as high as 3p/kWh, you could be overpaying without even realising it.
For example, if your energy rate is listed as 24.00p/kWh, it’s possible that 3.00p/kWh of that rate is the broker’s commission, meaning the actual base rate is 21.00p/kWh. The question you should ask is, am I paying more than I need to?
Why Work With a Broker?
You may wonder, “Why should I work with a broker when I can go directly to the supplier?”
The truth is, suppliers rarely offer their base rates directly to businesses. Instead, they offer these rates to brokers who bring in a high volume of contracts, thanks to the strong relationships they’ve built.
However, not all brokers are transparent about their fees. Some may include high commissions that significantly eat into your potential savings. While you might still be getting a better deal than by going direct to the supplier, you could still be saving more by comparing brokers.
At The Smart Energy Company, our commissions are much lower—typically around 0.5p/kWh. We believe in full transparency, meaning you know exactly what you're paying. By benchmarking your contract with us, you can ensure you're getting the best deal for your business.
How Much Are You Overpaying on Broker Fees?
Let’s take an example. If your business uses 250,000 kWh annually and your broker is charging a 3.00p/kWh commission, you’re paying an extra £7,500 in fees alone. Compare this to The Smart Energy Company, where our commission is typically just 0.5p/kWh. In this scenario, you would only pay £1,250 in broker fees, saving your business £6,250 annually.
Timing is Everything: Lock in the Best Rates Early
Securing the best energy rate for your business isn’t just about finding a good price—it’s about locking in that price at the right time. The energy market is volatile, with rates rising and falling due to factors like supply shortages, geopolitical tensions, and global demand shifts. Locking in your contract when prices are low can save your business thousands of pounds.
For example, let’s say your contract ends today. You likely received a renewal offer from your supplier around 2nd July 2024, when the wholesale market was trading at 80.00p/th for gas and £70.75/MWh for electricity. However, had you started monitoring the market earlier—let’s say in April 2024—you would have seen significantly lower prices, with gas trading at 65.00p/th and electricity at £60.50/MWh.
That’s a 23.1% increase in gas prices and a 16.94% increase in electricity prices over just three months. For a business using 250,000 kWh of gas, this difference could mean paying an additional £3,750 in gas costs alone. For a business consuming 500,000 kWh of electricity, the increase could cost an additional £5,470 over the year.
By giving yourself more time (ideally starting at least six months before your contract ends), you can monitor the market and lock in more favourable prices. Businesses that wait for their supplier’s renewal offer could be missing out on substantial savings by not acting sooner.
The graph above shows how wholesale prices have fluctuated over the last six months. Those who relied solely on their supplier's renewal offer could have locked in prices during a higher market period, while businesses that monitored the market earlier could have secured significantly lower rates.
At The Smart Energy Company, we offer free weekly market reports that provide you with up-to-date insights on the energy market. These reports help guide your decisions, so you can lock in the best rates at the right time. By staying informed with our regular reports, you can potentially save your business thousands on energy costs, and avoid the unpredictability of waiting for a last-minute renewal offer.
You can view our latest reports here: Weekly Energy Market Reports.
A Client's Perspective
We’ve helped many businesses avoid overpaying for energy. Here's what one of our clients had to say:
“I've worked with a lot of energy brokers and unfailingly they just want a quick transaction after a 5 minute call. The Smart Energy Company sent us weekly pricing and shared sector insights for several months before we signed paper. How could we use anyone else? Also, they found the best pricing. We did check.”— Chris DuCousso
Our approach is focused on client retention, not quick sales. We take the time to ensure you get the best deal for your business, with ongoing support and insights, rather than chasing monthly targets.
Get a Free Energy Quote Today
If you're unsure about your current contract or suspect you're overpaying in broker fees, let us help. By simply providing a copy of your latest bill, we’ll perform a free, no-obligation review to show you how your current deal compares with our rates.
You can easily get a quote from us by filling out our Free Business Energy Quote form. Even if your contract isn’t up for renewal yet, we’ll monitor the market and help you lock in the best rate when the time is right.
The Bottom Line
In the world of business energy, transparency is crucial. High broker commissions can add up, costing your business thousands more than necessary. The best way to avoid overpaying is by working with a broker who’s upfront about their fees and offers you valuable market insights to help you lock in the best price at the right time.
At The Smart Energy Company, we provide transparent pricing, low commissions, and regular market reports to ensure you're always in control of your energy costs. Don’t wait until your next renewal offer—take control of your energy costs now by contacting us for a free, no-obligation quote and start saving.
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