In The Margins

The rate of energy broker commission depends on their margin.

Brokers can charge a direct monthly fee, or even a percentage of savings, but by far the most common way they are paid is by adding a margin to their clients’ unit rates.

When sourcing quotes, the broker also asks the energy provider to add an amount of commission to every kilowatt-hour of electricity or gas.

To calculate how much your broker is making, it’s simply a case of multiplying their commission rate (or uplift / margin) by the amount of energy used per year.

 

 

Example:

If you use 200,000 units of electricity per year, and your energy broker commission rate is 0.2p per unit, the calculation is:

200,000 x 0.2p = 40,000p per year.  40,000 pence is equal to 400 pounds, so your broker makes £400 per year from your contract.

This is an example of a unit rate uplift, but it’s by no means typical.  Every broker is different, and whilst some offer great value, others take advantage of the fact that they don’t need to disclose their uplifts in order to sell a contract, and often just try to make as much money as they can get away with.

Tip:        If you ever think the rates offered by an energy broker seem high, ask them to confirm their margin in writing. 

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