The Perils of Broker Offers19 Apr 2012 | Filed under: Cost & Purchase Management
Brokers for all types of service proliferate on the internet. Why should you be wary?
Lets assume you are looking to renew your business electricity contract. Your supplier writes and offers renewal at 10p per unit so you shop around online & can find a price through XYZ Brokers ltd of 9.5p. Yes!!! Success!!!
But what lies behind this offer? Typically, XYZ Brokers ltd will approach a number of suppliers & will obtain prices on your behalf that includes their commission. This varies from supplier to supplier, area to area, client profile to client profile etc. So, your offer of 9.5p may comprise a cost of, say 8p per unit for the electricity & broker commission of 1.5p for example.
In reality, XYZ Brokers ltd may also have been given a price of 9p per unit for your business by an alternative supplier. However, this might comprise a cost of 7.8p for the electricity & broker commission of 1.2p for example.
Guess which offer XYZ Brokers are going to put to you! For them,it’s a no-brainer. At 9.5p per unit, you save & they make a handsome commission. Actually though, the best price available is from the alternative supplier at 7.8p.
Lesson learnt is ALWAYS use an independent consultant who will put the best offers directly to you the client, and then make their money from a share of the savings NOT commission. That way, you are certain of obtaining the very best offers from a consultant with no vested interest and where the whole process is transparent.
Time and again, we come across clients who, frankly, are being taken for a ride by totally unscrupulous brokers