Commercial energy brokers help businesses compare electricity and gas offers, run a tender, negotiate contract terms, and manage switching paperwork. A common question is how the broker is paid, and whether that payment model affects the price you end up signing.
In Australia, broker remuneration typically falls into three categories: retailer-paid commission, customer-paid fees, or a hybrid of both. None of these is automatically “good” or “bad”, what matters is transparency, scope of service, and whether you can clearly see how the broker’s incentives align with your business outcomes.
This guide explains the main models, how an energy broker commission is usually built into rates, how an energy broker fee may be charged, what a broker margin means in practice, and what Australian businesses should ask for before signing anything.
Two common ways brokers are paid: Commission vs fee
1) Retailer-paid commission (built into your energy rate)
Under a commission model, the broker is paid by the retailer after your business signs a contract. The commission is generally funded from the revenue the retailer receives from the account. In many cases, this means the broker’s remuneration is embedded in the unit rate (c/kWh), a fixed charge, or another pricing component rather than invoiced to you as a separate line item.
Commission structures vary between retailers and customer segments. In commercial contracts, the commission may be calculated as a cents-per-kWh amount, a percentage of charges, or a combination. It may be paid upfront, over time, or as a trailing commission while the contract remains active.
What this means for you: you might not receive a separate invoice from the broker, but you should still request written disclosure of how the broker is paid and whether any commission is included in the rates you are being offered.
2) Customer-paid service fee (invoice or consulting fee)
Under a fee model, the broker charges your business directly for professional services. This may be a one-off procurement fee, a monthly retainer for ongoing portfolio support, or a project fee for work like network tariff reviews, bill validation, or sustainability reporting support.
Some businesses prefer this model because it can be more explicit: the broker is paid by the customer, and the energy rates are negotiated with less reliance on retailer-funded commission.
What this means for you: you will typically see a separate invoice or a clearly defined fee schedule. You should confirm exactly what is included, what is not included, and whether any additional retailer payments still apply.
3) Hybrid models (fee plus commission)
In a hybrid model, a broker may charge a smaller service fee and also receive retailer commission. This can make sense for complex portfolios where the broker provides ongoing support, but it needs careful disclosure so you can understand the total cost of engagement.
What is “broker margin” in business energy?
The phrase broker margin is often used to describe the amount added into pricing to cover the broker’s commission or remuneration. In practice, this can appear in different ways depending on how the retailer structures the offer and how the quote is presented.
For example, if a retailer’s base energy rate is 18.0 c/kWh and the offered rate is 18.6 c/kWh, the difference may reflect multiple factors such as risk settings, account servicing costs, and potentially broker margin. You cannot assume the entire difference is broker margin, but you can ask the broker to explain how remuneration is handled and whether their payment is embedded in the rate.
Is commission “bad” for business customers?
Commission-based remuneration is common across many procurement and intermediary services. It can work well for businesses that want a no-upfront-cost approach to tendering and switching. However, the risk is that if commission is not disclosed or understood, customers may worry that the broker is incentivised to place you with a specific retailer or a specific contract structure.
Commission is not inherently a conflict of interest, but lack of transparency can be. The best practice is to insist on clear disclosure and to evaluate the broker based on how they tender the market, present comparisons, and explain trade-offs.
How to tell if a broker’s incentives align with your outcomes
Before you appoint a broker or sign an authority to act, ask for direct answers to the following.
- Who pays you? Retailers, us, or both?
- How is your remuneration calculated? Cents per kWh, percentage, flat fee, or something else?
- Is remuneration included in the rates you are quoting? If yes, can you quantify it or explain how it is treated?
- Which retailers are included in your panel? How many do you typically approach for our profile?
- Will you show us a like-for-like comparison table? Including term length, pass-through charges, credit requirements, and any key non-price terms?
- Do you provide ongoing support after signing? For example bill validation, network tariff checks, and renewal management.
How broker payment can affect your final electricity or gas price
In many commercial offers, the final energy rate reflects several inputs. Broker remuneration is only one possible component. Others can include hedging and risk allowances, load profile assumptions, contract term, metering and data costs, and retailer credit settings.
Rather than focusing only on whether a broker is paid commission or fee, focus on whether the process is competitive and documented. A well-run tender with clear comparisons often matters more than the payment model alone.
Questions to ask before signing a letter of authority
Many brokers will ask you to sign a letter of authority so they can request data and seek offers on your behalf. Before you sign, confirm what the authority allows the broker to do, how long it remains valid, whether you can revoke it, and what happens to information collected if you do not proceed.
If you want a deeper explanation of how the authorisation step works, see Zembl’s guide to letters of authority (LOAs).
Related Zembl resources:
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