9 Out of 10 Companies Are Paying Too Much for Gas, Electric and Telecoms
A survey, of over 300 organisations, by Utility Watch has revealed that 9 out of 10 companies are already paying too much for gas, electric and telecoms. This contrasts markedly to the consumer market, where customers aggressively shop around for the best deal. The latest media headlines surrounding utility price hikes suggest that this situation will get even worse.
The survey, carried out at the end of 2007, showed that in terms of gas and electric many commercial organisations often simply accepted an existing service supplier's terms when they took over commercial premises (39%), or lacked the knowledge of supply side contracts to ask the right questions to make effective comparisons (58%). In the case of SMEs, contracts were often set up by landlords and passed on, making the prospect for change more difficult. Most SMEs felt that that time pressures too impacted on their ability to spend time questioning costs. Surprisingly though, the survey also showed that the tender system used by Public Sector organisations had not prevented them from excessive costs either, with most believing that varying commodity prices for services over time, meant that further savings could be made on original bids.
In the telecoms sector, most sought the best deal on paper but failed to drill down into the detail to question what the real-life pitfalls were on line rentals, connection charges and sales techniques such as capped calls and minimum call fees.
Less than 9% of those surveyed were aware that independent comparison services exist and that initial cost comparisons were often free.
Says Lance Pearson, Sales Director of Utility Watch, "Its official, oil has hit over $100 a barrel. That's quadruple its price since 2002. The media is focusing on how this effects the individual and their daily lives. However, the most significant knock on effect is with businesses.
"How can you genuinely compare a monthly residential bill of £60 and a commercial bill of £1000 and not see that a 15% increase can affect a company exponentially? The gradual increase in utility bills has been felt by companies within the UK for some time and they have adjusted and amended their finances accordingly. However, with only three months until the new financial year, where are they going to find the extra money?"
Greg Shepherd, Director and founder of Utility Watch added, "It is incredible that both commercial and public sector organisations seem not to apply the same approach to utility procurement as they would do in buying IT or manufacturing equipment. In many cases, customers are blinded by contractual complexities or are ignorant of the real pricing structures of utilities and accept what looks good on the surface. Even in cases where organisations had struck an efficient deal in one sector, only a handful could claim the same across gas electric and telecoms. Commercial and public sector organisations alike must learn to ask for more. The latest news from the utility sector may galvanise organisations into action.
"By adopting a similar shopping around approach to the consumer sector, the savings for commercial organisations could be considerable. In many cases, savings can be in the region of twenty to twenty-five percent. However, few realise that help in obtaining comparative quotations is free. This is costing commercial organisations dearly, and will cost them more if they don't act now."
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