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Price comparison sites: something for businesses?

From meerkats of Eastern European extraction to rotund baritones, price comparison sites have given us some of the most irritating adverts ever devised, but that hasn’t stopped them going from strength to strength. And where the public have led, businesses are following in increasing numbers.

Last week, Moneysupermarket.com reported a growth in revenue by 11% in the third quarter of 2011, driven by consumers looking to secure the best rates before energy providers raised their prices.

Home services saw a 35% revenue increase, while insurance (14%) also saw significant gains.

Businesses feeling the squeeze

Blanket energy price rises have grabbed headlines but it is not just domestic users feeling the pinch.

Websites such as UKPower.co.uk and Energy Advice Line have seen a steady growth in visitors and revenues as businesses look to reduce their spiralling business costs.

A survey of members of the Forum of Private Business showed 95% of small businesses are experiencing a rise in costs at more than twice the rate of inflations, with energy prices the biggest problem.

The problem has some experts predicting a spate of business failures if temperatures drop, and heating bills rocket as a result.

The promise of savings has seen many businesses take to the internet to benchmark their current deals and secure better ones.

Are they getting the best deals?

But price comparison sites are not without their critics.

A major issue is that some providers do not allow their tariffs to be shown on comparison sites, while the ability to show the intricacies of an energy plan or insurance policy in a simple matrix is limited.

On many occasions, shoppers are not comparing like-for-like packages, while results are often skewed by the websites’ software automatically increasing excesses you’d be liable for in order to reduce the headline premium.

A further issue for business customers is the increased complexity of the packages they require. Whether it’s fleet insurance or a half-hourly electricity deals, businesses often require nuanced plans that are nigh-on impossible to present simply. The result is that many business price comparison sites simply provide a telephone number for customers to call, removing the convenience and scope of information that have made price comparison sites so successful for domestic users.

Specialist brokers

Businesses may find that the answer to reduced business costs lies in specialist service providers and brokers, rather than price comparison.

The complexities of the packages they provide mean it can be difficult for companies without expert procurement departments to be sure of achieving the best deals.

Among others, insurers and energy providers manage their risk and set up their pricing to attract their target market, meaning they can provide the lowest rates and premiums.

Going to a broker may not seem as cost-effective as going straight to the provider, but it can actually be cheaper! This is because insurers and energy companies sell at lower prices to brokers – who will be buying countless packages in the course of the year – who then pass on the benefit to their customers.

For example, motor trade insurance from Quote Me Today, one of the country’s leading brokers, is more competitively priced than most businesses would find if they went straight to an insurer. The fact the broker is in constant contact with a panel of providers also plays to their advantage, as they can drive down cost and secure a tailored package, whatever their customer’s needs.

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