pros & cons of price comparison websites
it’s hard to get away from price comparison websites. whether it’s the irritating opera singer with the twirly moustache, ‘gio compario’, belting out the gocompare tune. or the latest instalment from sergei and the other meerkats on comparethemarket, hardly a day goes by without at least one of them urging us to visit their sites to check out the latest prices.
after emerging in the united states in the late 1990s, comparison sites have become a permanent fixture in the uk financial landscape – and our ad breaks on tv.
the four main ones, moneysupermarket, gocompare, confused.com and comparethemarket spend collectively more than £150m a year on marketing and advertising. so it’s not surprising that 85% of people say that they have visited a price comparison site at least once.
in principle at least, they’re a great time-saver in comparing everything from broadband and energy deals, to life, travel and home insurance.
but can you be sure you’re getting the best deal for your individual needs? here we look at the pros and cons of price comparison sites:
convenience
the advantages:
price comparison sites have grown enormously over the last 20 years to a point where such a large proportion of people say they have used them. buying home insurance or looking for a new energy supplier is not most people’s idea of fun. price comparison sites appear to take the pain out of finding the best deal by quickly showing you what’s on offer with all the companies who have signed up to the site.
having all of the available products in one place can be convenient, especially for those who don’t have time to spend time sifting through all the different providers. most sites also allow customers to create an account and re-visit their quotes at a later date, should they wish to consider their options before they buy.
the disadvantages:
while having a panel of providers can save a lot of hassle in the short-term, it’s worth being aware that not all providers are willing to pay for their products to be on comparison sites, so consumers aren’t actually getting a full picture of the products available in the market.
this can mean that while consumers may save time by going to a comparison site, they may not actually find a policy that best meets their needs.
price
the advantages:
price is a driving factor behind many decisions, especially in the current economic climate. with comparison sites often listing products in price order, putting the lowest price first and the most expensive at the bottom of the list can be useful for users who have a specific budget in mind or know the exact product that they need.
the disadvantages:
consumers can often be influenced by buying the cheapest product to save money, rather than considering the product most suitable to their circumstances. for example, when buying travel insurance, checking the cancellation limit matches the price they’ve paid for their holiday. this could mean that while consumers pay less for a product, they may receive less in return in terms of cover or benefits, which they could have secured for just a little extra.
providers pay a fee to be on the sites, and not all providers are willing to do this. this means that consumers aren’t getting a full picture of the market and could miss out on a more suitable deal from a company that isn’t on the panel.
overview
the advantages:
comparison websites are great at showing a quick overview of the benefits included in a product. for example, for a travel insurance policy, they’ll show the policy excess, cancellation cover and emergency medical expenses limit. a snapshot of the cover included in a policy can save time for customers who want standard protection in place when they travel abroad. all of the products available can be bought online, saving consumers time as they don’t have to call up to go ahead with their purchase.
the disadvantages:
the comparison site model does not account for individual consumer needs and so users are left to make a decision on the right product for their circumstances based on very little information. in the above example, consumers would have to choose the most appropriate policy based on the price and three policy benefits. many consumers wouldn’t be fully aware of the cover included or if it met their holiday’s specific needs.
products bought on comparison sites also do not come with a point of contact, which means once the product is bought it is down to the individual to contact the provider if they have any questions. the comparison site the product is bought on cannot usually provide any clarity around the product information, other than the information available on the website.
conclusion
comparison websites are a quick and easy option for those looking for a snapshot of the benefits available in the market. they’re also great for those who are predominately priced-focused and understand the risks of buying a standard product that may or may not match their circumstances.
those, however, with more complex or specific needs may not actually benefit from buying through a comparison website as it could end up costing them more in the long run. for example, those with medical conditions may benefit from going directly to a specialist medical travel insurance provider, as they can often offer more tailored cover at an affordable price.
checking both the comparison website products and searching directly is a sensible approach to finding the best deal, which suits individual needs.