Need Propane To Heat Your Home? 3 Different Pricing Options
Posted on: 26 November 2019
If you depend on propane to heat your home during the winter months, you want to make sure you get the best possible price on that propane. Being smart about what you pay for your propane can help you save a significant amount of money. In order to do so, you need to understand the different payment options available for you.
Pricing Option #1: Marketing Pricing
One of the first choices you have for paying for your propane is to pay market price for the propane. What this means is that you will pay whatever the current market rate is on the day that your propane is delivered.
That means that the rate that you will pay for propane will not be the same. Depending on what is happening in the natural gas market, you may pay significantly more or less for the propane that you need to heat your home, depending on when you have the propane delivered and what is happening in the market at that time. One of the advantages of this type of pricing method is you don't have to sign or lock into any contract or agreement.
Pricing Option #2: Pre-Buy Pricing
Your second choice is to pre-purchase your propane for the entire winter season. With this type of pricing, what you pay for the propane that you use will be set on the day that you sign the contract. The price that you pay will generally be close to the current market value. You will pre-purchase all the propane you need at once, and then the gas company will deliver the propane as needed to your home.
With this type of option, your gas prices will not be determined by the whims of the market. If the market price for propane increases during the winter months, as it commonly does, you'll save money with this method.
However, with the pre-buy method, you have to have the money necessary to purchase the propane upfront. With this method, you can't spread out the expense of purchasing your heating propane over the entire winter.
Pricing Option #3: Locked-in Pricing
Finally, you can choose to sign up for a locked-in or capped pricing. With this type of agreement, you usually sign a contract to purchase your propane from the same company for a year. During that year period, you will pay a fixed rate for your propane. The rate will not change throughout the year, no matter what happens in the market. If the propane prices go up or go down, you will still pay the same rate. Usually, a locked-in price is a good deal, as it allows you to accurately predict what you need to pay for gas throughout the winter months.
If you need to purchase heating propane, you need to consider what pricing option will work best for you. Locked-in pricing can ensure consistent pricing throughout the year. Pre-buying can save you money if you can afford to purchase what you need up-front, and market pricing can work if you don't need a lot of propane and want the flexibility to work with various propane companies.
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