Tuesday, November 30, 2010

Am I Paying Enough Yet?

Hypothetical situation: you have just broken free of your previous 3-year contract and are just about ready to sign on the dotted line for another 3-year term and a phone upgrade. You call in and spend an hour on the phone chatting with a customer service representative, declining all offers to upgrade your services which would double your monthly payments. All the details and prices are finalized when the representative informs you that you will need to pay an additional $25 administrative fee to be able to buy a new phone with your new contract. You're shocked and a little outraged. You ask what exactly you're paying $25 for and you get the typically-scripted response:
There are significant costs in terms of processing, administration, inventory management fulfillment, stocking, shipping and handling every time a phone is ordered.
Unfortunately, this situation isn't hypothetical.

I wholeheartedly agree with businesses making money. I understand that everything mentioned above is not free. I even, somewhat, understand why these costs weren't stealthily sneaked into the monthly cost of service plans. What I don't understand is why it suddenly became necessary to demand additional payment from customers when such payments were not necessary previously.

A quick glance through the above-linked thread will reveal several theories on the matter. The predominant sentiment seems to be that our incumbents are starting to feel the financial effects of customer attrition caused by new entrants into the Canadian wireless marketplace. Personally, I think we're missing some theories involving aliens. And tin-foil hats. I like tin-foil. Some people, however, seem to be of the opinion that those of us who have retention plans deserve to pay a little extra when upgrading our hardware. Apparently, we don't pay enough for our wireless services for the carriers to make a profit.

I may be naive when it comes to economics and business practices, but isn't it safe to assume that our carriers wouldn't offer retention plans so readily if they weren't making substantial amounts of profit, despite the heavily-discounted prices?

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