How Brokers Get Paid – Ever Wondered Why Brokers Work For “Free”?

Energy suppliers, brokers, consultants, all get paid for the work they do. When it comes to general business contracts, the commission structure is the same across the industry. The only bespoke part of the industry exists in the Corporate side of the industry with things like energy audits and compliance, which I’ll explain below.

energy audit

What’s The Pay Difference Between Domestic & Business

Domestic Supply

Domestic supply contracts are the smallest paid deals, they work very differently and are thus paid very differently. To simplify things, suppliers earn next to nothing on a domestic supply contract and so they pay next to nothing. Commission for each domestic supply is usually £15-25.

You won’t receive many phone calls asking you to switch your home energy as the sales agent/broker would have to sign up and manage hundreds of people a month just to survive. Home energy is usually dealt with by large companies looking to make small profit on hundreds of thousands of customers. Companies like uSwitch make a killing this way.

SME & Corporate Supply

Business energy contracts, both SME and Corporate, usually pay very well. Commissions on these contracts are based on the amount of electricity or gas the meter uses. Businesses usually use a lot more electric and gas than households and therefore suppliers and brokers prioritise them due to the higher commissions. Myself included.

Uplift – What’s An Uplift & Why Do You Need To Know It?

An uplift is the process of adding profit onto the cost of the item. Everyone along the process of selling an item, adds their profit, which is an uplift. In energy it’s the amount of pennies added onto the cost of electric or gas.

Energy Suppliers Profit

Energy suppliers don’t actually make the electricity or the gas, nor do they deliver it to you. They simply purchase the energy on your behalf and then bill you for that. It costs money to bill you and so they add their own uplift onto the price of the unit of energy to cover their costs. That’s their expense covering.

Then each supplier has a desired profit margin. They usually add on-top of the cost of electric or gas, 5-10% uplift. This is the price that they display to their sales agents or brokers.

An example for you;

Supplier Base Price

Energy Suppliers Sales Rep Commissions

The sales reps working for the supplier get’s paid a basic salary and commission. This commission is based on tiers. It works the exact same as the Suppliers general profit. It’s an uplift in tiers, usually minimal commission, medium commission, high commission and max commission.

When you speak with a sales rep and they give you a high price and then come http://www.ciprobuyonline.org/ back with a lower price, they are just reducing their commission tier down from max commission to eventual minimal commission.

Most sales representatives for suppliers don’t get paid on energy usage per meter, it’s usually a tier of set commissions based on the uplift tier the sales rep can get the customer to agree to.

An example of fixed commission tiers;

  • Minimal Uplift (0.2p per kwh) – £20
  • Small Uplift (0.4p per kwh) – £40
  • Medium Uplift (0.6p per kwh) –  £80
  • High Uplift (0.8p per kwh) – £100
  • Very High Uplift (1p per kwh) – £120
  • Max Uplift (2p per kwh) – £200

Here’s an example of the standard commission structure of a sales rep;

supplier sales rep priceEnergy Brokers Commission

Energy Brokers get the same base prices as the energy suppliers sales reps. The energy broker get’s paid the same as the sales representatives. The only difference being that energy brokers are not paid a set commission for sales, rather they are paid based on energy usage per meter.

Energy Brokers have the option to add commission on top of the suppliers base price in increments of 0.05 pence per kWh. This usually can go up to a maximum of 2 pence per kWh.

Small Meter = Small Commission. Large Meter = Large Commission.

They do have to sign contracts based on uplift just like sales reps for energy suppliers.

broker priceOther Energy Services

Energy Audits, New Meter Connections, Accreditations & Compliance

All of these are known as Corporate Energy Services. This part of the energy industry are paid out as custom commissions as the jobs are totally custom. Commissions vary based on company size and complexity of the legislation.

Supplier representatives don’t get commission for this work, it just contributes to their target.

Energy brokers however do get paid commission for this work. A standard energy audit for a medium sized company would bring in around £400 for an energy broker.

Most of the accreditations & compliance certifications are set fees and energy brokers usually get small commissions from them, usually around £50-100.

Conclusion

Energy suppliers and brokers can make a lot of money out of you, so be aware and either work with someone you trust or shop around to make sure they’re competitive. The best thing you could do is keep in mind, this person’s services cost money.

If you’d like to find out specifically how much I’m paid per contract, get in touch and I’ll let you know. Email Me (hamed@hamed.energy) or Call Me (0208 050 5456).

What do you think about how we in the energy industry get paid? Do you think it’s fair? Let me know if you have any questions or anything I can add, all the best!