Cell Phone plans have long been the cash cow for Phone companies. So much so in fact that many other industries have taken this model and used it to guide and mold their own business models around.
Why have they been so effective ? Because the focus of the charges to the consumers is Monthly Charges. It seems that the average American is happy to pay huge money Bills as long as they get the Phone ( the capital or one time cost ) for Free. In truth it makes no financial sense for someone to agree to pay $400 per month in cell charges and to lock themselves into a three year contract just to save $400 or $500 on the phone itself.
The reality is that over the course of 3 Years and an average Bill of $400 per month the consumer pays a total of $ 14,400.00
What is that you say ? Holy Cow ? Indeed, holy cow. And to gain this kind of massive fees all the cell company had to do was offer you a $500 cell phone for free. Seems like a great deal … for the CELL COMPANY !!
Get the Facts
Be smart when you get your next cell phone and find out more about the local Cell phone plans available to you before buying the first you see. The last one I purchased it actually made more sense for me to buy the phone outright for $600 and to have a month to month contract. You must consider the costs over the life of your contract before you leap into the fire with what appears to be the best deal.
Different Types of Charges
It is not the one time charges that catch you, its the month in and month out charges that produce incredible cash flow to the Cell companies.Consider this:
A Cell phone company startup is new to the area and only has 50,000 customers which is VERY small these days.
The average monthly Bill is $300 per customer and therefore the Cell Company has Revenue of $ 1.5M per MONTH or $18 million dollars per year.
Its staggering how quickly this builds up, and now you can see why Cell phones and indeed all Technology Services these days have gone to this monthly billable model.
Be smart, don’t be one of the lemmings who signs over all your money when you do not have to.