Getting to Know the Pre-Pay Customer: From Millennials to Wealthy Individuals
February 1, 2021
Pre-pay energy solutions allow utility customers to add money to their utility account before energy is used. As the power is consumed, the pre-paid balance declines.
Pre-pay options are popular with many customers because they gain more control over their energy usage and payment schedule. They also benefit from reduced or eliminated deposits and disconnect/reconnect fees. Pre-pay energy appeals to diverse groups of people for a variety of reasons. Let’s explore who primarily benefits from pre-pay and why.
Millennials
About: Millennials are the top pre-pay demographic due to their socioeconomic status, willingness to try new payment trends, and preference for smaller, manageable payment sizes.
Market Size: Millennials make up nearly 22% of the U.S. population and 27% of the Canadian population.
Why They’ll Benefit: Pre-pay makes it easier for Millennials to manage their expenses and payment dates.
- 70% of millennials are interested in expense management services that provide more control over their spending.
- 62% of millennials live paycheck to paycheck.
- 25% of millennials are concerned with how energy programs can save them money.
For more information on millennials, check out our infographic 8 Reasons Why Millennials Will Love Your Utility Pre-Pay Program.
Limited-income individuals
About: Low-income individuals earn less than $28,000 per year and often struggle to afford one large utility payment each month.
Market Size: 11.6% million Americans and 9.5% of Canadians are considered low-income.
Why They’ll Benefit: Pre-pay allows these individuals to better control their energy costs.
- 20% of net income goes toward utility costs for low income individuals.
- 46% of low-income adults have struggled to pay their bills since the pandemic hit in March 2020.
- 39% of uncollected electric bills is attributed to changes in unemployment rates.
Find out how Pre-Pay programs can drive results in an economic downturn.
Wealthy Individuals
About: Wealthy or retired individuals often own multiple properties, from vacation homes to rental properties.
Market Size: 21% of Americans are in the ‘upper-middle’ or ‘high’ income class, and 7.5% of Canadians’ income rank in the top 10%
Why They’ll Benefit: Pre-pay allows this group to voluntarily shut off power for months at a time when relocating to and from second homes or as a way to manage utility bills at a rental property.
- 64% increase in upper-tier incomes in the past five decades.
- 42% increase in high-end home sales in Q3 2020 as people looked for second homes amid the pandemic.
- 13% of adults who moved during the COVID-19 pandemic relocated to their second or vacation home.
Small/medium-sized business (SMB)
About: SMBs affected by the COVID-19 are opting for smaller, more frequent payments that better align with their cash flow.
Market Size: Small businesses account for more than 98% of all U.S. and Canadian businesses.
Why They’ll Benefit: Pre-pay offers SMBs the payment flexibility they need, particularly in challenging economic times.
- 43% of businesses temporarily closed in 2020 due to COVID-19.
- 2 weeks worth of cash is all the median business with $10,000+ in monthly expenses has on hand.
- $195,000 is the average debt for a small business owner.
Pre-pay energy gives customers more control over their energy usage and when they pay. This “load and go” solution appeals to a wide range of consumers with different wants and needs.
Download our Complete Guide to Pre-Pay Energy Programs to find out if pre-pay is the right solution for your utility and customers.
Sources:
- Statista. “US Population Share by Generation.” 2019.
- Statistics Canada. “Economic Well-being Across Generations of Young Canadians: Are Millennials Better or Worse Off?” April 2019.
- Accenture Consulting. “Driving the Future of Payments.” 2017.
- CNBC. “62% of millennials say they’re living paycheck to paycheck.” 2019.
- Utility Dive. “What do millennials want from their energy providers?” October 2017.
- Investopedia. “Which Income Class Are You?” 2019.
- NPR. “U.S. Census Bureau Reports Poverty Rate Down, But Millions Still Poor.” 2019.
- Government of Canada. “Canada reaches lowest poverty rate in history.” 2019.
- Urban. “Families Need More Help to Keep the Lights On and the Water Running during the Pandemic.” 2020.
- PEW Research. “Economic Fallout From COVID-19 Continues To Hit Lower-Income Americans the Hardest.” April 2020.
- Bloomberg Law. “Virus Could Push Unpaid U.S. Utility Bills to Highest in Decades.” May 2020.
- Investopedia. “Which Income Class Are You?” 2019.
- The Measure of a Plan. “Rich, Richer, Richest: a Profile of High-Income Canadians.” 2020.
- PEW Research. “6 facts about economic inequality in the U.S.” February 2020.
- Bloomberg. “Luxury Home Sales Surge, Highlighting U.S. Housing Wealth Gap.” October 2020.
- PEW Research. “6 facts about economic inequality in the U.S.” February 2020.
- Oberlo. “10 Small Business Statistics.” August 2020.
- Government of Canada. “Key Small Business Statistics.” 2019.
- PNAS. “The impact of COVID-19 on small business outcomes and expectations.” July 2020.
- Business.com. “Business Debt: How Much Is Too Much to Carry?” April 2020