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Fixed price energy tariff vs variable rate energy tariff

Last updated on May 26th, 2024

As energy costs continue to rise across the country, more and more households are struggling to keep up with their energy bills. When choosing between energy providers and their various tariffs, it’s important to pick one that works for your family’s lifestyle and budget. Two popular tariff options are fixed-price and variable rate energy tariffs; both of which come with their own set of advantages and disadvantages. In this article, we’ll dive into the key differences between these two energy tariffs and discuss how to decide which one is right for you.

1. Unpacking the Difference: Fixed Price versus Variable Rate Energy Tariffs

The Energy Shopping Space
When it comes to understanding energy tarifs, there can be an initial confusion as to the types available and which one may be the most beneficial for your needs. Among the common choices are variable rate and fixed-rate tariffs, each of which can offer deeper clarification:

  • Fixed-rate tariffs offer consumers a set period of time where a locked in rate of energy will be honored. This rate will remain stable regardless of various market and pricing fluctuations.
  • Variable rate tariffs will see consumers pay the current market prices for their energy usage, which may have a degree of fluxuation depending on the time of the year.

Making the Right Choice
Understandably, choosing between these two tariffs can be tricky, as each has their unique advantages. Those who want a sense of financial security and assurance may benefit from abiding by fixed rate tariffs, while the more thrifty consumer may not feel the need to lock in a price and may be willing to ride out what the market has to offer.

In either case, it is necessary to look into each option and determine which one is best based upon individual needs. Each tariff offers pros and cons and it is up to the consumer to choose which one is the most well suited for them.

2. Key Questions to Ask You When Choosing a Tariff

Getting Stuck in the Details?
It’s easy to get overwhelmed with all the jargon and tariff types available, so remember to ask the following key questions when narrowing down your search and determining the most suitable tariff for you.

  • What payment frequency are you able to commit to?
  • How long is the contract term and is it able to be broken if needed?
  • Are you able to take advantage of any discounts or special offers available?
  • Are there any areas in which you cannot use your tariff?
  • Are there any peak periods in which you will be charged more than usual?

Looking Ahead
It’s also important to ask questions that’ll help you stay well informed on your current tariff, such as:

  • How transparent is the provider when it comes to raising and lowering rates?
  • Are there any restrictions or obligations associated with the tariff?
  • Are there any additional benefits or support available for long-term subscribers?
  • If you enter into a contract, do you have a specific migration policy which will allow you to move to a different tariff if needed?

Answering these questions will help you decide which tariff will help you make the most of your service, and avoid any complications further down the line.

3. Pros & Cons of a Fixed Price Tariff

A fixed-price tariff is a price plan that gives you the same amount of energy every month – usually at a discounted rate! There are many advantages and disadvantages to this kind of plan. Knowing what to expect can help you make the decision that’s best for you and your energy needs.


  • Security of always knowing how much you’re paying each month
  • Discount or price guarantee
  • No surprises or shock bills
  • Good for budgeting your energy costs


  • No benefit from hikes in energy costs
  • Chance of losing out if energy costs drop
  • Lack of flexibility if you switch to using more energy
  • Can be locked into a contract, meaning you won’t be able switch if you want to

4. Pros & Cons of a Variable Rate Tariff

Variable rate tariffs can have their benefits, as well as their pitfalls. On the plus side, they offer flexibility in terms of cost, as they adjust according to market conditions. This enables a consumer to pay the best rate for their electricity, helping to save money on their bills. It can also encourage switching between suppliers, again allowing them to pay the lowest rate at any given moment.

  • Pros
  • Adjustment to market conditions
  • Potentially save on electricity bills
  • Ease of switching between suppliers

Unfortunately, variable rate tariffs are not without their pitfalls. The lack of a fixed rate means that the energy price can rise suddenly and unexpectedly. This can be especially concerning for those on low or fixed incomes who rely on their energy bills staying the same from month to month. Also, they often come with confusing terms and conditions, so it is important to read all the fine detail to avoid any nasty surprises.

  • Cons
  • Unpredictable rate hikes
  • Unsuitable for those on low-incomes
  • Difficult to understand terms and conditions

5. Deciding Which Tariff is Right for You

Choosing the right energy tariff for your home can seem like a daunting task. There’s a range of options available, different terms and conditions, and costs to bear in mind. To make the right decision, it’s essential to understand each tariff and factor in your household’s individual needs.

You’ll want to consider:

  • How much energy you will typically use
  • What type of payments you are able to commit to, monthly or quarterly for example
  • Whether you’re open to price fluctuations or would prefer your energy prices to remain fixed

As well as how much you’re willing to commit upfront. Many energy companies offer cashback incentives or discounts in return for a certain period of commitment. For example, some tariffs will include a discounted fee for the first year, so it’s important to look for what could potentially save you more money in the long run. It’s also a good idea to compare different energy companies and weigh up their products.

6. Weighing Cost against Risk

We are all familiar with the downsides of taking risks but sometimes it is worth it. When it comes to business, the line between accepted risk and recklessness is determined by weighing cost and risk. Here are a few things to consider:

  • What Is the Potential Reward? If you have identified a situation that shows some promise, then it is important to evaluate the possible gains. Before taking any substantial risk, it is important to know what a successful outcome could bring.
  • What Are the Dangers? Related to the potential rewards, you must also consider what could go wrong. Are your decisions backed by proven facts or do you have to rely on speculation? Be honest with yourself and the potential consequences.

Weighing the potential benefit with the potential risks is one of the most important decisions in business. Taking calculated risks can lead to big rewards while reducing the chances of self-sabotage. With the right approach, risk-taking can be a great tool for entrepreneurs and business owners.

7. How Long Term Contracts Work

When it comes to long term contracts, it’s important to understand how a typical contract works. Long term contracts are typically drawn up and agreed upon between two parties and can last anywhere from a few weeks to a few years.

  • Firstly, both parties will negotiate a blind agreement that outlines the terms and conditions of the contract. This would include the rights and responsibilities of each party, the time frame of the contract, how the contract will be terminated, and any penalties associated with breaking the contract.
  • Once the contract is signed, both parties must adhere to all of its rules and regulations. If one of the parties fails to meet the contractual obligations, they may be liable for damages depending on the severity of the breach.
  • It’s important to remember that long term contracts are binding and should not be entered into lightly. You should always read the contract carefully and make sure you understand all of the terms and conditions before signing.

Lastly, if changes to the contract must be made, both parties are expected to negotiate and come to an agreement for the amendment of the contract. It is critical to document this amendment so that it is legally binding and both parties can be held accountable for any changes.

8. Knowing When to Consider Switching Tariffs

Though Not Always Necessary, Sometimes Switching Tariffs Can Save You Money

Choosing the right tariff can save time, hassle and money. When considering a switch, it’s important to analyze your current contract and whether or not it’s suitable for your needs. Here are some signs to look for when deciding whether or not to switch tariffs:

  • Your current tariff no longer meets your needs
  • A new offer free of charge and with better terms has become available
  • Your usage pattern and consumption costs have changed significantly
  • You are undercutting yourself with the current tariff conditions

Be sure to research the market thoroughly and ensure that you’re familiar with the cancellation and switching policies and procedures. You should also look closely at any long-term contracts which you are currently under, as these may contain penalties for early termination. The important thing is to be aware of your options and avoid paying more than is necessary. The right tariff could be the difference between a huge expense and money saved.

9. Benefits to Consider When Choosing

When choosing a new product, service, or activity, you should consider the benefits associated with it. There are a multitude of benefits to consider depending on the situation, so let’s take a look at some of the most important.

  • Cost: Many people view cost as the most important factor when making a decision. It’s important to consider the initial cost versus the long-term savings associated with a product or service.
  • Convenience: Another key benefit is the convenience that a product or service brings to your life. Choose an option that requires little effort and overhead on your behalf.
  • Customer Service: Customer service is an important consideration when you’re investing in any product or service. Make sure you understand the company’s customer service policies and procedures.
  • Quality: Reliability and quality should be paramount when you’re making a selection. Choose a product or service that has a proven track record and won’t leave you feeling disappointed.

When it comes to making a choice, consider these important benefits and weigh up the pros and cons to determine which option is most suitable for your lifestyle. Once you’ve made a decision, you can enjoy the myriad of benefits associated with it.

10. Common Problems and Pitfalls

Often, when newbies enter the world of technology, they inevitably hit a wall of technical difficulty and find themselves frustrated. Although technology is a great aid, it can be hard to figure out the nuances of troubleshooting, particularly when the issue turns out to be a common one.

Below are some of the most common problems encountered by those new to technology:

  • Forgetting passwords – There are always a million passwords to remember, and more often than not, you’ll find yourself forgetting at least a few here and there. The best thing to do is to use a reliable password manager.
  • Outdated drivers – If your hardware isn’t running smoothly, it’s probably due to an outdated driver. Make sure to periodically update your drivers.
  • Software glitches – Software run amok is a common problem most techies will run into. Make sure to update your software frequently and backup your progress regularly.

Fortunately, most of these are easy to tackle with a bit of know-how. With a little perseverance and patience, you’ll be well on your way to perfecting those tech skills in no time!

11. Understanding All the Small Print

Most of us have made the mistake of signing up for something without properly understanding the terms and conditions attached. Though it might seem overwhelming to go through all the small print, it’s much better in the long run to make sure you completely comprehend every aspect of an agreement.

Make sure to read everything – when reading an agreement, do not skim through it or skip parts. Every section is important, and it’s best to take the time to fully understand each one.

  • Check the termination rules
  • Be aware of service fees
  • Inspect the full list of benefits

These are just some of the things you don’t want to miss out on.

Equally as important is to keep a paper trail of the document. Store it in a safe and secure place and make sure to save the agreement in both paper and digital form. You’ll be thankful you did in case a dispute ever comes up. And always keep a special copy of any written agreement you sign. With these simple precautions, you can avoid any nasty surprises down the line.

12. Reaping the Rewards of Your Decision

Making decisions aren’t easy – often it’s a case of weighing up the pros and cons, meaning even the soundest of decisions come with a degree of tension or anxiety.

Reaping the rewards from that decision? Now that’s the good stuff! Taking a moment to reflect on all your hard work, and seeing the tangible results from your choice is a great feeling. Here’s a few signs of success to watch out for:

  • Smiling a bit brighter: Even if it’s just a small reward, the positive impact of achieving a goal can have a significant effect on your wellbeing.
  • A light at the end of the tunnel: If the decision you made has been a difficult one, this reward is a sign that all your hard work has been worth it.
  • Something to celebrate: When big decisions pay off, it’s natural to take time to celebrate. Whether it’s an internal ‘pat on the back’ or sharing the news with friends, recognise the moment and make it special.

By keeping an eye out for these signs of success, you’ll be sure to appreciate just how far you’ve come – and enjoy the satisfaction that your decision has made a difference. No matter which energy tariff you choose, you want to make sure that you get the best rate and service possible. Doing your research, reading reviews, and comparing deals can help you find the best deal and tarif that fits your energy needs. Just remember that ultimately, your decision will depend on your energy consumption, budget and needs.

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