Dragons' Den deal of £120,000 was struck for 3 percent of entrepreneurs Henry De Zoete and Will Hodson valuing the company at around a dragon dens United Kingdom record of £3.7 million for a start up on the BBC show.
The service they seek to provide is a free switch service for United Kingdom energy customers. At the time of filming the proposal to the den in April it was stated the service had six thousand customers which has since multiplied and an average saving of over £200 per customer. This service is currently limited to gas and electric but seeks to expand to broadband and car insurance soon.
According to the Look After My Bills websites FAQs as of the 5th September 2018; “The way we are able to keep the service free for users is that we take a commission from the energy companies that we switch people to. This is the same amount whichever the energy company and we only switch you to companies we trust who have good customer service.”
This sounds like a sustainable model which could lead firms who do similar comparisons but do not carry out a full switch service to move in to other areas
a large number of areas the company hasn’t yet invested in to become seen as the market leader. With the valuation of £3.7 million this leaves much less to invest in advertising to expand in to already established Go Compares insurance market a company which as of 2016 had a net profit of £16.8 million.
Companies when previously faced with comparison sites such as Directline have opted to feature on comparison sites boosting differentiating features such as market leading price. Some claiming to have deals you won’t find elsewhere. There could also be an argument that by having to pay a commission to the third party, this creates a middle man which would overall increase costs if margins are to be maintained consequently increasing prices.
Another factor which may narrow the market is Ofgem’s proposed price cap on default standard variable tariffs, this proposal has been estimated to save 11 million customers a combined billion pounds on their bills. Although it is believed better deals can be still sought. Will people be less motivated to switch if they see they are already saving money?
It is possible as the area grows that this process may be fully automated to lower cost. Although it is possible energy companies will not sign up advertising better deals else where as have insurance companies previously have providing barriers to this new business model.
Issues that may be faced by Dragons' Den 'Look After my Bills' contestants
By John Richardson
Deputy Editor
Vice-President of Cardiff University Economics Society
Politics and Economics BSc (Econ) student
A