With one electricity provider after another announcing double-digit increases in bills, households are bracing themselves for an expensive winter. Yet for Martin Dix, the rises are good news. His firm, Current Cost, sells gadgets that tell people the real-time cost of the energy they're using making the quarterly bill less of a shock.
Dix, 51, first had the idea of measuring the cost of electricity use when he was working with amp meters as a 15-year-old apprentice electrician in 1975. "Current meters give readings in amps and I thought it'd be good to have a monetary value that everyone could understand." But it was only in 2004, "when Tony Blair started implementing the Kyoto Protocol and forced electricity companies to act", that Dix could see an opportunity.
He went to China to find manufacturing partners, then to a university "business incubator" to "work on my business plan". But after six months, he was fed up. "There is only so long you can sit around drawing up business plans. After a while you need to get out there and make it happen." Desperate for a backer, Dix presented his product on the BBC programme Dragons' Den. His idea was torn to shreds and rejected by the sceptical dragons', who complained that it had "no clear customer demand angle". Next, Dix tried approaching meter makers. One told him: "if it was such a good idea, don't you think someone else would have developed it?" he recalls. "What they didn't see is that new carbon legislation and rising energy costs changed everything."
Subscribe to MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE
Get 6 issues free
Sign up to Money Morning
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Dix decided on a new strategy to sell direct to energy companies. "I knew that they could give me the scale I needed without having to deal with lots of separate retailers." He met with representatives of the Big Six' and eventually one bit. In 2006, Scottish & Southern Energy ordered 5,000 units. Then, while they were being made, Npower ordered 20,000. Thanks to the orders, Current Cost generated £250,000 of sales in its first year. "It was a great way to start a company. I had no debt and no need to take on partners. We were profitable from the word go."
The popularity of the gadget pushed sales up to £3m by the second year, but his success didn't go unnoticed. Rivals started piling in. "The problem is that you cannot patent the device and it is relatively simple to make." With competition driving down profit margins, Dix's answer was to diversify. Current Cost expanded into gas price monitors. It also began producing individual device monitors for example, a gadget that can tell you how much electricity your fridge freezer is using. "We had to differentiate from our competitors by giving customers more detailed information." The next step was a device that allows customers to control appliances remotely. "It might seem a bit strange now, but in the future all households will keep prices down by managing their demand more efficiently."
Dix also expanded abroad, using a series of distribution partnerships to start selling Current Cost products in 13 different countries. The strategy has paid off, with sales reaching £12m last year. Given the recent price hikes, Dix is upbeat about the future. "People will soon realise that it's not nerdy to know how much electricity your freezer is using."
Just Group has the wind behind it – should you invest?
8 of the best houses for sale for around £500,000
