Are you a business owner looking for cost efficiency and consistency when it comes to business energy quotes? Fixed-price contracts may sound like the perfect solution, but before you jump into one you should be aware of all their pros and cons. Having a good understanding of how fixed energy prices work can help ensure that you make the best decision for your business electricity and business gas. In this guide, we'll discuss everything there is to know about fixed energy prices and what they can do for your business. Read on to learn more!

What are Fixed Energy Prices and How Do They Work?

Fixed energy prices refer to a type of energy contract in which customers pay the same rate for energy regardless of how much they use. This type of contract is designed to offer long-term cost certainty and protection against price fluctuations in the market.

Usually lasting between one and three years, fixed energy prices involve the customer receiving a set rate for their energy, electricity, or gas, which will not change unless they choose to end the contract or switch providers.  

What are the Pros of Fixed Energy Prices?

Offers stability and predictability:  

Fixed energy prices can help businesses plan and manage their budget more effectively by providing fixed monthly operating costs.  

Protection from energy price spikes:

By paying consistent business energy deals, you are protected from jumps in energy prices. This can also help you manage your business’ cash flow more efficiently.  

Can often be cheaper than variable-rate tariffs:

Fixed-rate energy tariffs are often a more cost-effective choice than variable-rate deals. Although these contracts may come with a slightly higher up-front cost, in the long term, customers could save more money on their business energy.

What are the Cons of Fixed Energy Prices?

Limit opportunity to invest in lower pricing  

As you are already committed to a contract, fixed energy prices prevent you from capitalising on rate reductions from other providers, meaning you potentially may be paying more than you need to.  

Exit fees

Should you choose to leave your tariff early due to being unhappy with the supplier or finding a cheaper price elsewhere, you will have to pay an exit fee which can range between £5-£35 per fuel.  

Remember the expiry  

If you don’t act when your tariff expires, you automatically roll on to a variable tariff which is usually more expensive and can increase in cost over time.  

How Long Do Fixed Energy Prices Last?

Fixed energy prices typically last anywhere between two and three years, depending on the length of the contract with your energy supplier. Some may offer one year fixed rates, whereas others may even extend this to five years or more. During the time period, you'll pay a set rate for the energy you use – regardless of any changes in the market.  

It's important to note that different suppliers offer different contracts, so make sure you read through your provider's terms and conditions carefully. Take into consideration the early exit fees, as fully understanding what happens at the end of a contract is key.  

It's also worth bearing in mind that fixed rates can be subject to change during the course of their term – usually if there are changes made to things like taxes and duties associated with business energy production or delivery.

So, Is It Worth It?

Fixed energy prices may be an attractive energy plan for those who don’t want to worry about fluctuating rates, or who want the predictability of knowing their bill won’t suddenly skyrocket. Having the security of rate assurance can help businesses stay in budget and continue to thrive.

However, before settling on a fixed energy plan, it is important to consider all your options and weigh the advantages and drawbacks of a long-term rate agreement. Don’t forget to take advantage of provider comparison tools that can guarantee the best deal for you and your business. With that in mind – why not compare and save today?

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