As I’m starting to analyze the preliminary results of the 2023 Utility Fee Survey, I’m surprised many utilities still don’t charge an application fee.
Before I explain why you should be charging an application fee, let me pause for a minute and ask if you’ve participated in the 2023 Utility Fee Survey? If not, would you please take a minute to complete the survey now?
As you can see from the graph above, the percentage of utilities charging an application fee has remained relatively flat over the course of the last four Utility Fee Surveys. And, the preliminary results for this year’s survey don’t indicate a significant change.
Why should you charge an application fee?
The purpose of any fee is to recover the cost of providing a service. In the case of an application fee, the service provided is activating a new account for billing. Let’s look at some of the costs you incur in activating a new account:
- Office staff salary and benefits to enter the application in the system
- Cost of a credit check, if you perform one
- Field staff salary and benefits to drive to the location and take the initial meter reading (unless you have an AMI system)
- Gas and maintenance expenses for the vehicle used by the field staff
- Updating the turn-on service order and activating the account for billing
These are costs you should rightly look to recover through an application or service initiation fee.
An overlooked source of revenue
Unless your utility is unlike the ones I’ve worked with, you’re always looking for ways to increase revenues without raising rates. An application fee is an excellent option. It’s administered fairly to only those customers who move in and, if they don’t move frequently, they will only pay it one time. So, why aren’t you charging one…?
Utility Billing Mailbag
Don’t forget the new feature I’m calling the Utility Billing Mailbag. Send me your questions and I’ll take my best shot at answering them.
Complete the 2023 Utility Fee Survey
If you haven’t already completed the 2023 Utility Fee Survey, and would like to, please click here to complete the survey. It should take less than five minutes to complete.
If you have any questions, please feel free to e-mail me at firstname.lastname@example.org or call me at 919-673-4050.
Thank you in advance for your participation in the 2023 Utility Fee Survey.
Are you missing out on other fees?
Is your fee schedule up-to-date and are you charging all the fees you should be? If you’re not sure, please give me a call at 919-673-4050 or email me at email@example.com to learn how a business review could help you find out.