Re:Poll: Apply HN Runoff – Which two startups should YCF fund?
by magthor on Monday May 02, 2016 @11:03PM
(#11617543)
Hi chatmasta, Kevin from Utiliz here. How did your business do? Splitting savings is always a hard pricing model to sell. Our unique angle is that we don't just switch customers to the best plan once, we remain their agent, track the market daily and switch them whenever a new opportunity comes up. We do that in return for a low, transparent, annual fee from our customers instead of taking a hidden spread on the rate. In deregulated states one can almost always find short term 3-6 month rates lower than the incumbent's rate, often as much as 20-30% cheaper, so our service can pay for itself in as little as one month. Brokers who can bring large aggregated loads can negotiate better than retail rates, even with their supplier commission. Because we will be a zero-commission broker for the suppliers (we're paid by our own customers), as we scale we'll be able to negotiate even lower rates for our customers. Not sure how long ago you were looking at this space but many suppliers now have some mechanism to help with automation of bulk switching and for those that don't we are building the tech.
Re:Poll: Apply HN Runoff – Which two startups should YCF fund?
by chatmasta on Monday May 02, 2016 @11:36PM
(#11617711)
It was a small shop run by two guys, mostly drawing from their first and second degree connections. But they had hundreds of customers and were making in the mid five figures per month IIRC. Take that with a huge grain of salt.
People were more than happy to pay a percentage of their savings, but that might have been due to personal relationships with the founders and the fact that these people were pretty rich already.
And yes, the ongoing relationship you mention helps. That gives an answer to "why wouldn't I just do this myself and keep 100% of the savings?"
Re:Poll: Apply HN Runoff – Which two startups should YCF fund?
by magthor on Tuesday May 03, 2016 @09:13AM
(#11620276)
Chatmasta, you are 100% correct. There may be times where the best rate we can find is publicly available but the service aspect will retain customers in this case, especially as we are charging a reasonable flat fee. However as we are a broker we have access to private rates and as our book grows so will our ability to negotiate discounts thus making us more sticky. A core part of the beta is a 'how much did I save' feature which will make cancelling a tough choice. Thanks for your comments!
After my freshman year, I interned at a small company in Texas that had the same business model as Utiliz. Send us your bill, we analyze your usage data and get you on the best plan. You split the savings with us.
Do NOT underestimate the energy bills in Texas... The average prices I saw were ~ $800. Obviously this was a luxury market, but your perception that people are spending 80-150 on energy is completey wrong. Not only that, but they are often far overspending from what they need to.
The problem with electricity deregulation is that every company is selling and reselling the same service, often even from the same plants. So the only differences are superficial pricing and marketing differences. Two customers living a mile apart, in similar size houses, using similar amounts of electricity, might be paying drastically different amounts of money.
When I got there, the processes were all manual... but I automated a bunch of it. The whole business is very automate-able, as it's just a matter of parsing .pdf electricity bills and comparing prices on the homepage.