Bundles, deals and freebies. While it may seem like you're getting an epic deal...bundling your utilities isn’t all it’s cracked up to be!
Hey look, we get it. We LOVE a good deal. After all, Powershop is the home of Powerpacks, where you can save on your power by buying packs in our Shop. So, we’re hardly the ones to write off a good deal. But that’s the point of this guide. When it comes to bundled packages of utilities, is it always a ‘good deal’? Or is there more to the story?
Let’s ‘unbundle’ this dilemma…(oh yes, we went there).
Why do companies bundle?
There’s a reason why energy companies branch out into other monthly utility services. The most common being broadband, mobile phones and gas. It makes sense for them to do it because they already have a big customer base purchasing one service, so to add on another (or two) is a logical step.
In fact, it’s not just power companies that add on other utilities. It works the other way too. In Aotearoa, some telecommunications companies expand their services to include energy.
Why do people choose bundled utilities?
Bundling makes sense from a revenue perspective for energy companies. But what’s in it for the customer?
Convenience
One big reason is convenience - one bill, one place to go for support questions and one website to log into (sometimes). This convenience might be attractive to people who are time poor, don’t like ‘admin’ or are new to utilities like younger flatmates.
Cost savings (at least it seems that way...)
But there’s another aspect of bundles that can often appeal, especially in tight cost of living situations – the promised savings. The issue with bundling is that companies can provide savings on some utilities, while making up the difference with others, such as discounted broadband for a period of time, with higher energy per kW/hr rates.
While the convenience and so-called savings can be enticing initially, eventually time-bound discounts (eg 12 months discounted) fall away, leaving you with bundled services that may not be the best option for your budget.
So, why should you be wary of choosing convenience? Let’s break it down.
Bundling utilities can mean less control over your plan features
Ever been given a gift basket from someone? Or maybe a biscuit sampler from your grandparents? There’s always something in it that you’re less keen on and other things you like. But unlike some biccies from your nan, you don’t have to smile and deal with it from your utility company!
Bundling usually consists of some standard plans where the combination of these has been carefully put together for a broad range of customers. If you’ve got specific needs for your mobile phone, but more normal power usage, then a bundle might not make sense. You can find yourself making compromises in the plan details simply for convenience or expected savings. And these savings often don’t stack up over a longer period.
By splitting out your utilities to different companies and plans, you have complete control over the features of your plans and your costs. That’s because bundling unlocks discounts and deals only by committing to the different services in a specific combination.
Package deals often don’t save you money in the long run
How much is that convenience hitting you in the pocket long term? Well, Money Hub’s study into bundling actually found that in most cases bundling doesn’t save, but costs more vs. paying for each service separately.
Each service comes with its own costs for the business. These vary and can be controlled by service providers differently. For example, the power wholesale market for power can be quite volatile based on weather, usage demand and many other factors. But Broadband and mobile, while still requiring maintenance, is more predictable.
Often a ‘cheap’ broadband service in your bundle can be offset by higher energy costs, meaning that you’re in no better position (and sometimes worse off) by bundling everything together.
A free giveaway might not even be what you want
A free TV! New fridge! Your own 9.7 inch tablet computer! We can’t blame you for having your head turned by some of the tasty freebies on offer. There’s nothing wrong with free stuff, as long as you make sure it’s not going to leave your power costs worse off.
Locked in and loaded price
Unfortunately, by signing up goodies with a bundle deal, you’re committing to a long period of time with that provider. We don’t think it’s unreasonable for companies to have checks and balances in place to prevent freebies going to those who will leave immediately. But as a consumer you need to understand that in the two years you’ll have to commit to them, you’ll cover the cost of the TV and well beyond.
If your bundled power usage rates end up comparing higher than other single service options, the question is: did you really need a new TV? And if you did, was it this specific model? We can often overlook our own preferences when something is ‘free’.
We don’t want to be the party pooper, but sometimes it’s okay to look a bundled plan gift horse in the mouth. It might just be a sneaky Trojan horse hiding higher energy prices.
You’re stuck with one company’s customer service for better or worse
When you’re selling invisible services like power, mobile or broadband, the long-term customer support experience is an important part of the puzzle. When you bundle utilities, you’re stuck dealing with one call queue, one expected email response time and one approach to customer care. If your provider does all of these well, then great! But if not, you can quickly feel at the mercy of one brand for your household utilities.
Jack of all trades? Or master of none.
Many providers start out as one core service before branching out. Are you really getting specialist technical support on all your utilities by choosing a bundled provider? These services may even be managed by a third-party partner, which can become a problem if you’ve got an issue.
You’ll miss out on specific deals from other providers
Why get one sweet deal when you could be getting multiple? The power company market in Aotearoa is competitive, so there’s lots of options for you to choose from. The same goes for mobile and broadband, where you can find a plan that suits your needs well with some research.
By bundling your services, you’re essentially handing over better deals in exchange for convenience – and whatever deal that bundler is offering.
In our view, it’s better to do a bit more homework and create your own bundle.
It’s not always a seamless experience between services - even with the same company
Just because you’ve bundled your utilities, you shouldn’t expect the online experience to be as convenient. Broadband, mobile and power are managed differently from a cost and usage perspective, so sometimes you’ll have different sections or even entirely separate portals to log into. Those time savings to manage your account and monitor usage might not be all they’re cracked up to be!
You might also find that you’re placed into different service-specific queues when calling the provider, each with their own wait times. And while it will vary by business, you may need to speak with multiple people to get a resolution to all your questions.
Bundles can come with a time commitment
Often this is the case. Savings offered by bundling are recouped through the minimum period of the contract. This can be around two years, which is a long time in the world of utilities like broadband or power. While we don’t do time-committed contracts, it makes sense for other companies to. When you choose a bundle, you need to understand what early termination fees apply, as these might be set up to recoup those savings you made.
So, ask yourself, is convenience worth the freedom to leave without cost if your situation changes?
With some planning, separate utility providers are still very efficient
Let’s turn our attention to the alternative approach now – using separate companies for your various utilities services. We think it’s important to remember that managing utilities doesn’t need to be a major admin headache. In today’s digital age, you can keep track of everything, stay paid up and get the best deal.
Here’s some handy tips to make the process easier:
- Set up automatic payments on your broadband, mobile, power etc. so that you’re not having to jump into internet banking for every bill that comes in.
- Schedule bill payments to go out on the same day.
- Consider shopping for power with Powershop, where we’ll push the latest Powerpack to your phone and in a few taps you’ll have pre-purchased your energy as a discount.
- Set up a folder in your email inbox and create a filter that sends all your emails from your utilities into that folder.
- Make use of chatbots and emails. If you don’t like sitting on the phone waiting to talk to someone, then jump online.
- Keep your utility companies’ apps in one folder on your phone’s home screen. Then you can check all of them quickly. If they don’t have an app, create a shortcut to your home screen from your provider’s login screen/portal. You can do this on Apple and Android.
- Have a dedicated bank account in your online banking for all your utilities bills. This stops automatic payments trying to go through from an everyday account that may not have the correct funds available.
Building the combination that suits you – not the company
The real upside to killing your bundle and choosing each provider separately is the power to create a winning combination. Your utilities should make sense for the type of household, business and users you are.
Find an energy company that has special deals for your solar power system or an internet service provider (ISP) that gives you unlimited fibre for your home business with no speed slowdowns. You might want to choose a mobile phone provider with great customer service and that has the phone you want with a compelling two-year no-interest free deal.
By going down this route, you can also explain your needs to each potential provider and get them to offer their best option. Spend an afternoon doing this and you’ll end up with a list of options to choose. If you’re spreadsheet-inclined, you might also want to create a comparison table before making a choice. Whatever you do, this approach means you’re in control.
Love deals and choices? Get your fix in the Shop
Powershop don’t do bundles, but we do offer Powerpacks. A Powerpack is dollar amounts of power that come in a range of sizes and are available for purchase in our Shop. This includes our Future Packs, which give you up a sweet discount on your Standard Rate of power if you buy them for several months in advance. Then we have Staying Power Powerpacks that reward customers with discounts for their loyalty. And we’ve got plenty of other packs that we release across the year for you to jump on and save with! Want to learn more about how our Shop works? Check out this handy page.
Compare power companies with the help of our guides
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