When Prices Are Super Low, There Are Probably Hidden Fees
It’s tempting to hook onto ads for rock bottom propane prices. But beware! When the advertised price is shockingly low, there are often hidden costs involved. There are reasons why the price of propane varies.
Kauffman Gas is the first to tell you, we’re not the cheapest propane company out there. We will stand by the fact that our prices are fair and value is built in.
Propane Price Bait and Switch Tactic: Only the Tip of the Iceberg
Who could resist an advertisement for for $.99/gallon propane when everyone else is selling propane for $2.40/gallon?
The sad fact is, more people should.
Unfortunately, low-price baiting is an all too common tactic propane companies use to reel in new customers searching for the best propane price for their budget.
Companies will try to hook new customers by advertising prices that dramatically undercut their competitors. But this crazy-low price is only the tip of the iceberg. Once the customer gets the bill, they will see a different price than what they thought!
Why this works
Propane is a commodity for many, so customers want to shop for the lowest price.
ropane companies capitalize on this. They mask the real fee of propane by advertising a super low rate – masking the real fee of the propane. Propane companies are able to advertise propane at such a low cost because there are significant conditions attached.
These conditions are set up to exclude the majority of price-hunting customers, limit it to a small time frame, or hide additional in the fine print.
So technically, the propane company can advertise a crazy-low price because it is available. But the price is only available to a small subset of customers.
Bottom line: Sneaky companies make the low-cost back some how.
Hidden Conditions and Costs to Look For in the Fine Print
Propane companies that advertise low prices often have a long list of conditions attached in the fine print. Common things we’ve come across include:
Must order X amount of gallons to qualify – This condition might seem standard, but the value of X is important because it is often far more than customers need. We’ve seen advertisements that require customers to order 800 gallons of propane to qualify. 800 gallons is way out of range for most residents who own 250 gallon or 500 gallon propane tanks! In fact, it is often more than most homeowners use in a year.
Winter season locked rate – This means the low price is only available for a few months. Then the price skyrockets. So you might sign on at $.99, but your rate might be $4.00 (way over market) after the designated period.
Start up costs – “First delivery fee”, “Administrative fee”, “Hook Up Fee” – Bargain-bin price companies are more likely to itemize everything. $5 here and $10 there can really add up on your bill!
Extra fees per each delivery – After your first delivery, you’ll start to see fees that negate the low price of propane.
- Minimum Delivery Fee – Check to see if the company will charge you if you don’t meet the minimum delivery.
- Delivery Fee – This can be as little as $.03/gallon – but doesn’t that just make the low price three cents more expensive?
- HazMat Fee – really just extra revenue for delivery so price per gallon can be more attractive
Bargain Propane Companies Make It Difficult to Leave
When propane customers are fed up when their propane company doubled or tripled the price, it’s not so easy to say goodbye.
Indefinite or Tightly Sealed Contracts – Many times, companies lock you into indefinite contracts or give you a tight window when you could possible get out.
Huge Cancellation Fees – Propane users who own their tanks might like to shop around. But check with the propane company to make sure you won’t be charged a huge cancellation fee if you switch companies. $300, 499,
Equipment pick up fee – If you managed to squeak out of that tight contract and sign up with another company, you still might be hit with a hefty $100+ equipment pick up fee.
How to Spot an Honest Price for Propane Gas
The price you are quoted should be in the ballpark of the average residential propane price at the time. Keep in mind that propane prices vary based on your location and the time of year.
Ask your propane provider these questions to help determine if they are trustworthy, or if they are full of gas.
- What is my rate after the first delivery? (Compare that price, not only the promotional price)
- What is my rate after the first year?
- Are there any delivery fees?
- Are there any first fill delivery discount?
- Are there any delivery fees?
- What extra fees can I expect?
- What are the terms of me getting out of my contract?
Bottom Line: Shop for more than price when buying propane
Value is important when it comes to a propane gas company. You don’t want to be hit with a high bill or be left out of gas because the company promised more than they could deliver.