The electricity bill is one of the main utility bills every person has to pay. A study has revealed the average electricity bill for single-person households is around $1273 per year.
Since it is a significant household expense, people are always looking for a cheap electricity plan to help them save money. When you are looking for cheap energy plans, you will come across terms like price anchoring.
Here’s some information about price anchoring and how it affects your electricity bills.
What Is Price Anchoring?
There are a number of energy retailers in Australia. Each retailer offers a large range of electricity plans to entice more customers. To make energy plans attractive, energy retailers offer various discounts with each plan.
Some of the most common discounts that you are likely to find in a cheap electricity plan are daily supply discounts, usage charge discounts, or on-time payment discounts.
However, if you study these discounts carefully, you will see that they don’t offer a direct reduction of a specific amount. Instead, the energy retailers often offer percentage discounts, which can be misleading.
This method also makes it hard for customers to determine exactly how much money they will be saving each month as a result of the discounts.
This, in turn, leads to customers being conned into signing up for plans which claim to offer high discounts but don’t. This strategy is called price anchoring.
Comparing Energy Plans
As per financial experts, cheap energy plans are not always the best tools to save money. You need to consider your priorities and requirements while comparing electricity plans.
Whether you choose an electricity plan for your home or business, you need to look for a reliable energy supplier with whom you don’t have to face frequent power cuts or bear the burden of unnecessary costs. You need to pick electricity retailers that offer fair and transparent pricing policies.
Several energy comparison websites allow you to compare electricity plans from different electricity retailers. These websites automatically provide you with a direct comparison between energy plans. You don’t have to calculate discounts or make other calculations to know your savings with a particular plan.
Some energy retailers list a particular energy plan at $100 per month and offer a 20% discount, while some energy retailers offer an energy plan of $60 per month without any discount.
However, when you analyse both plans, you will see that you will be paying $80 after discounts in the first plan. However, the second plan offers the same benefits at $60. In the end, you may get a 20% discount by taking the first plan, but you will actually be paying $20 extra for it.
The best energy comparison websites in the country show you the actual savings in dollars and save you from these traps. As Australia increases investment in renewable energy sources, energy prices are expected to fall. Hence, there is no shortage of cheap energy plans from retailers, provided you know what to look for.
To sum up, electricity is a necessary household expense that you have to deal with. The freedom to choose energy retailers and electricity plans is a blessing, and when used right, it can help you save a great deal of money in the long run.
