Thursday, March 12, 2009

What does getting a free phone mean to a cellphone company?

I want to just shed a little insight to the mobile telecommunications. When people come in and want to buy a phone, or start a new line of service with [enter your cell phone company's name here] they all want the same thing. A free phone. They don't want to pay for anything. So what always happens is that they get their free phone and then walk out the door. They are fine for a little while, but after a year or so, they start to see the limitations of the free phone. They walk back in and ask if they can get a new phone. I say sure. I give them an average price of $199.99 for the phone. They then ask, but the paper said that its only $19.99, why don't I get that price. So then I tell them why they don't.

When you came in and got service with [insert phone company's name here] you signed an agreement with us to be our customer for the next 24 months. As a result if this agreement we have you a great price on the phone. That price was $0.00. We gave you $199.99 off the phone when you signed up. Now you are here 12 months in, and realized that maybe this phone is too limited. And you want a $249.99 phone for $19.99. But you forgot to figure out that, when we gained you as a customer we lost $200.00. You signed up for a $39.99 price plan, so using simple math, we the cell phone company broke even 5 months after you signed up. So now [enter your phone company name here] is up $280.00, and now you want us to reach into our pockets after a year and give all of that back to you less $50.00? Would you do that? I sure as hell wouldn't. You've been with us for 12 months, and if we did that, we only made $50.00? I'm sorry but no.

So now you know how the cell phone business works. Next time you walk into your store and demand a free phone, think about the repurcissions. That company isn't going to give you a thing! They can't afford it. A little hint. They aren't lieing when they tell you that the full retai price of the phone is the exact cost of what the cell company pays to get that device on the shelves.


Starlene said...

Well this is a different from the inside. It just goes to show, there's always two sides to every story. Most of us non-insiders like to think of giant corporations as swimming in money like Scrooge McDuck by night, and whining about shrinking profits by day.

Julie said...

Wow got some bad customers today already do you??

~K said...

Huh ...what someone actually got a free phone and walked out without paying anything?! Last time I got a free phone it was "And that will be 175.00 sir". What?? Yes well you have to pay for the phone at the discounted rate, plus taxes, plus this fee and that fee, then you can send in and get a rebate. Free...Shmee there is NO such thing as a free phone!

Paddy-Pat Rat-Tat-Tat said... cell phones actually cost the service providers $200?! I always thought there was at least a little mark up on those. Maybe 10 to 25%

photo19 said...

Although I'm in the UK (and I work in network support rather than on the 'front line') I know that it works the same over here too and it's good to see somebody else spell it out!!

It's Just Me said...

Yeah, so there!

I have missed all you fine folks here in blogatopia! back finally from vacation and this post made me smile, as you always do Adam. Tell like it is, truthful but no babying. LOVE IT!

Still a fan,

My Priceless Communication said...

I do agree with this post. Getting the right device for the first time could help too instead of being cheap. I was with Alltel when Verizon took over i was suppose to have a discount if i change to Verizon but they couldn't program my phone on the Verizon plan that should have a discount and i had an htc touch that i got for free at the time i would have to buy one for almost $200.00 to get switch over.

But i found this Site. and I build a blog that would link to it.