The 5 Biggest Challenges Energy Brokers Have With Pricing
The energy management industry is intensely competitive. Ensuring you can offer aggressive rates is essential for growing your business. However, pricing can be complicated when you are first starting out. Choosing the right suppliers to work with, understanding how commission works, and determining your client’s profile is not always straightforward. We want to go over the five biggest challenges energy brokers have with pricing and share some helpful tips on how to overcome them.
1. Market Volatility and Competition Amongst Energy Brokers
The market has continued to have its fair share of surprises. With a market that is ever-changing, it can be hard to be confident in what you can offer potential clients. Selling energy based on the price used to be simple, but has turned into a high volatility market in recent years. On top of that, the competition is like never before. With the industry boom, it can be discouraging to think of all the competition.
How can you combat market volatility? Do not panic. A high market will have to come down eventually and not all energy brokers have the same supplier relationships as you. Find ways to set yourself apart from the competition and remember that being authentic can take you far. When it comes to selling energy in a high market volatility, consider selling energy futures. This would secure a future promise to buy or sell a product and ensure you generate a sell in this uncertain market.
2. Commission Sales
It can be scary to work in an industry that dictates your income based on how well you perform. With energy management, the uncertainty that comes with paying the bills from month to month can be stressful. When you are first starting out, you will likely need to base your income on upfront commission. This will help you keep a steady income while you are becoming more established in the industry.
The good news is that as an energy broker, your business will likely grow to have residual income. Energy brokers differ from other commission roles due to their ability to build a recurring monthly income by obtaining customers. While this may be difficult at the beginning of your career, once you gain credibility, energy suppliers will be more likely to offer an upfront payment plan. One solution is to partner with a more experienced broker in your area. This will get you the pricing you want while increasing your credibility.
3. Determining Client’s Profiles
To give clients accurate and competitive pricing, you must understand their profile first. Defining their rate class, load profile, and annual usage is a key step before sending their information to a supplier for a quote. If this information is not accurate, you could lose trust with the client and will have to start the process all over again.
The annual rate is how much energy the client uses in a year. This can be useful to project how much energy they will also use in the future. Then, depending on their usage, they will be divided into a rate class. Their rate will be determined by which class they are assigned to.
Lastly, the load profile shows your energy usage on a daily basis. It tracks patterns like when the usage peaks and when there are lulls. Typically, suppliers will favor clients with a balanced load profile and may even be inclined to give them better pricing. Ensuring that you have all the necessary information about your clients will be pivotal in efficiently securing the best package for their needs.
4. Sacrificing Sales
We know that securing supplier relationships is probably at the top of your to do list – as it should be! It helps you gain independence and build a credible reputation within the industry. There is a lot of assumption that who you work with will make or break your business. However, in today’s market, it is best to provide your clients with a wide range of options, not just a limited few. Suppliers have become wary of taking on new brokers and will be more likely to play it safe by sticking to their current brokers. Establishing a group of suppliers to partner with can be difficult.
While it may be true that you need a rockstar reputation to attract suppliers, it can also be said that to build a stellar reputation, you need to build relationships with suppliers. That cannot happen without working with them. If you are only hearing back from a few options, do not get discouraged. Instead, view that as an opportunity to begin crafting your reputation and supplier relationships.
5. Extended Wait Times to Hear from Supplier
Once you have found a good pool of suppliers, those supplier relationships are not always a breeze. One of the most frustrating and common problems for energy brokers is hearing back from suppliers in a timely manner. This can lengthen the process of getting accurate quotes and may delay your whole schedule. If you do not get prices until the next day, then you risk sending outdated rates to potential clients. If that happens, you will need to restart the whole process from the beginning.
One way to combat this? Working out of a marketplace can give you access to a whole new host of potential suppliers. If one supplier is not easy to work with, you can browse through other options at the drop of a hat. This can help you build relationships and find the perfect fit for you. By utilizing a marketplace, it will relieve stress off your shoulders while giving your clients the best packages.
Grow Sales and Revenue
Just because energy management is a turbulent industry, does not mean you are left on your own. Broker 360 is an online platform that is designed to help brokers increase efficiency by reducing the risk of contract rejection, streamlining the lead generation process, and providing full-market pricing. Learn more about how you can work smarter, not harder by downloading our free guide today!
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