Using Price Comparison Sites in the UK
65Price comparison sites in the UK are quite popular. London is considered as one of the most expensive cities in the world to live in; prices of typical consumables here tend to cost double or more compared to other countries where there is lower standard of living. It is no surprise then that many UK residents would patronize price comparison sites to find the lowest cost deals in the market.
As will often be revealed by reports from comparison sites, prices can greatly vary from one supplier to another. At times, that could indicate the low level of competition for that particular product. The UK retail industry is not as robust as the US’ for instance. This condition contributes further to the incidence of relatively high prices in the UK.
Price comparison sites differ in terms of specialization or focus. Some cover a whole range of related or unrelated retail products or services while some prefer to specialize in particular product/service niches. An example of a generalist price comparison site would be amazon.co.uk while a specialist would be a company like comparethemarket.com whose main service is providing prices of different car insurance products in the UK.
Advantages to using Price Comparison Sites
UK residents view using price comparison sites as practical for a number of reasons:
· Potential for even better quotes vs. going direct. Many price comparison sites strike exclusive deals with participatingcompanies that allow the former to provide price quotations to customers that are even lower compared to say, customers going directly to merchants.
- Cost-free. Inquiring online from these price comparison sites is free. Price comparison sites also do not charge customers any fee for accepting deals with merchants. Instead, the price comparison site charges the participating company a joining fee.
- Legitimate companies. Price comparison sites make sure that they work only with legitimate businesses. They don’t want to be endorsing companies that will not deliver. For the customer, this is a critical consideration as there are many companies out there which may promise even lower prices but may deliver faulty products/services or worse, not deliver at all. .
- Less work. Price comparison sites will provide you price comparison from at least 20 merchants. That’s a lot of merchants which if you’re on your own doing all the canvassing, will have a long time getting quotations from.
Disadvantages
Needless to say, there are also some disadvantages to being completely dependent on price comparison websites:
- Their lowest price may not be the lowest in the local market. Some companies may decide not to participate in price comparison sites so that they can avoid having to effectively pass on the price comparison site’s joining fee to customers. Hence, it is possible that there will be retailers not covered by price comparison sites willing to sell you your desired product for less.
- Dependence on online market. Price comparison sites make money from the joining fees they charge to companies that decide to participate and provide their price information. For a company to decide to join, the price comparison online site must possess a key strength: it must experience sufficient online traffic from relevant customers. Relevant customers refer to customers who are seriously looking for the company’s product or service.
Hence, to come out ahead from using price comparison sites, you must make sure that your chosen service provider covers at least some of the most-price competitive companies for your desired product/service. You may still not get the lowest price but you will certainly not have paid much more than the actual lowest price available in the market.
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Comments
Hi Life Insure, many thanks for the insightful comments. Yes, this article is meant to address the price comparison site industry as a whole. Regarding the joining fee, while you are correct in saying that there are other 'payment' options for companies wanting to participate in comparison sites, I would tend to believe that joining fees would be more the standard rather than the exception. Price comparison sites, like any business, need to generate cash to be viable businesses and charging joining fees is the most practical way for them generate that cash.
On your second point, this article is solely focused on price comparison sites whose business crux is being able to instantaneously provide price information from a wide variety of suppliers. The other options you mentioned fall more into the category of say visiting retail shops individually, which is an entirely different category of accessing price information.
In any case, many thanks for your comments, readers will benefit from your information:-)
Life Insure says:
2 months ago
This is a nice article, Laura. I like the division into positives and negatives, making for a balanced and objective piece. I agree with the majority of your points, but do not totally agree with your disadvantages.
Whilst most price comparison sites do charge a 'joining fee' for insurance companies there are, as with all business, other ways of participating in affiliate programs with a price comparison company and as such there are businesses that won't pass on costs in quoted premiums.
I appreciate that this piece was probably intended to be a generalisation, though the point stands that there are great price comparison sites out there that are not solely dependent upon online quotation systems. For instance, it is possible to go through the process over the phone or have quotations mailed to your address.
I do agree with you that it is important to know as much as possible when thinking about using price comparison services. Any reputable broker will provide you with the names of insurers offering quotes with no obligation to commit. But you're right in advocating shopping about - even with price comparison!