why is the phone cheaper on a tab than retail

  • 1
  • Question
  • Updated 3 months ago
Why is the Essential Phone cheaper on a tab than retail?
Photo of brian

brian

  • 360 Points 250 badge 2x thumb
  • angry

Posted 3 months ago

  • 1
Photo of Paul Deschamps

Paul Deschamps, Mobile Master

  • 199,448 Points 100k badge 2x thumb
To get you to stay with koodo and become a long time customer
(Edited)
Photo of brian

brian

  • 360 Points 250 badge 2x thumb
What kind of answer is that?  It doesn't at all answer the actual question.
Photo of Allan

Allan, Mobile Master

  • 56,446 Points 50k badge 2x thumb
The essential phone includes $100 in activation credits if you get it on the tab. You are getting the phone cheaper because you are paying monthly for a plan. All carriers do this not just Koodo...
Photo of brian

brian

  • 360 Points 250 badge 2x thumb
It doesn't matter what you call the difference (activation credit, etc.) between tab and retail, ultimately you are still paying for (a portion at least -- $100) the device with the rateplan (i.e. it's subsidised) and continue to pay that (subsidy cost) after the phone is paid off.
Photo of Mats

Mats

  • 11,504 Points 10k badge 2x thumb
A $40 a month plan is still a $40 a month plan whether you have a tab or not. So are you saying the people paying $40 a month are still subsidising a phone even though they have never got one from Koodo?

How do you think it should work if a person has a $40(or any $ figure) a month plan and wants to get a phone from Koodo?
Photo of Mayumi

Mayumi, Mobile Master

  • 112,704 Points 100k badge 2x thumb
@ Brian.
Plan price is plan price. Phone price is phone price. They are 2 different things.

If you buy a phone on Tab, you are showing  a long term commitment with Koodo. 
If you buy a phone out on retail price, you could go anytime. 
That's why Koodo is giving bonus/activation credit for ppl who are committing on Tab  
Photo of stillgolfing

stillgolfing

  • 1,910 Points 1k badge 2x thumb
@brian:

If you are going to speculate about a "hidden cost"  shouldn't you speculate about how much the hidden monthly cost might actually be? That way you could decide, if it is worth while, to switch providers after 24 months. For instance - Actual monthly cost of plan = $39 and hidden cost = $1, is $24  of "hidden cost" after 2 years, leave and you are up $76. Of course at $35 and $5 hidden, you would need to pay off your tab and leave earlier.
Also, it's unfortunate that all those who purchased their phone outright somewhere and have the same plan are paying a monthly "token" fee for a phone Koodo did not provide. In fact  I have to assume, since Koodo's rates appear to be inflated and uncompetitive, anyone with similar math skills to yours would have bought their phone outright and gone with one of the many other provider's with similar,  yet less expensive, plans.
(Edited)
Photo of Paul Deschamps

Paul Deschamps, Mobile Master

  • 199,448 Points 100k badge 2x thumb
It prevents ppl just buying phones from Koodo to use on another carrier basically..... Especially now that they all come unlocked it's easier than ever for ppl to get a phone and jump ship. It's an incentive to use the phone with koodo.
Photo of brian

brian

  • 360 Points 250 badge 2x thumb
But if the price ($360) is fair (at least break-even), then why do they care?  Sure, they would love nothing more than to sign up another user, but if they fail to do so even once they have attracted and user (and failed to close them) and they are making a profit (or at least breaking even) on the price of the phone, it's not a loss (other than opportunity) to them.

If however the $360 is not at least break-even (i.e. it's subsidised by the 24 months of service) then they are slipping back into the model of rateplans subsidising devices and continuing to rake in that subsidy recovery even after the device is paid off.

In any case, we'll see what the CRTC's position is on that when I get a response.
Photo of Dinh

Dinh, Mobile Master

  • 32,212 Points 20k badge 2x thumb
Brian,
Good luck with the CRTC. Let us know what they response. I would be happy to see their response to your inquiry.
(Edited)
Photo of Paul Deschamps

Paul Deschamps, Mobile Master

  • 199,426 Points 100k badge 2x thumb
It's not subsidizing your looking at it completely wrong, it's an incentive that saves you money in the short run and you can take advantage or not, you are not forced to. Like was said above you can buy it outright and take a no tab plan which is cheaper overall so your not saving money actually getting it on a tab in the long run and if anything they are making it more equal either way.
(Edited)
Photo of brian

brian

  • 360 Points 250 badge 2x thumb
@Mats:
A $40 a month plan is still a $40 a month plan whether you have a tab or not. So are you saying the people paying $40 a month are still subsidising a phone even though they have never got one from Koodo?
Yes!  $40 a month plan is still a $40 a month plan whether you have a tab or not and the tab cost per month * months should be the cost of the device.  But it's not.  That's what's not working out.

And yes, by extension, if the $40 a month plan is actually recovering the difference between the $360 and $460 for the same phone, people who bring their own phone and pay $40 a month are paying a subsidy recovery cost they should not be paying.

That is entirely the point.  Ultimately if the real value of the phone is $460, then that should be recovered entirely by tab fees plus up-front fees if the tab fees won't fully recover in the 2 years.  It shouldn't be subsidised by the rateplan fees that everyone else not paying off a device subsidy has to also pay.

@Mayumi:
Plan price is plan price. Phone price is phone price. They are 2 different things.
You are exactly correct.  The plan price and phone price are (well, should be) 2 different things and so the price should be the same whether it's paid fully up front or whether the cost is split up into 24 monthly payments.  Any difference in those is a subsidy being recovered out of the rateplan -- that same rateplan price that people not subsidising a phone have to pay also.

@stillgolfing
it's unfortunate that all those who purchased their phone outright somewhere and have the same plan are paying a monthly "token" fee for a phone Koodo did not provide.
EXACTLY!  token is better known as subsidy.  A fee that people who are not subsidising the purchase of a phone shouldn't have to pay.

Of course, nobody would know they were paying a unwarranted subsidy fee for a phone they already own except that Koodo make it obvious that that's how they are structuring the cost by offering phones at different prices depending on whether they are in a position to slip a subsidy fee into a rateplan if you stay with them or not (i.e. if you just buy the phone and go elsewhere).
Photo of Mats

Mats

  • 11,504 Points 10k badge 2x thumb
How is a company ever to offer a deal to you when you take it as you're being screwed in the long run.

Good luck with the CRTC and by all means let us know their response to you.
Photo of Timo Tuokkola

Timo Tuokkola, Mobile Master

  • 139,992 Points 100k badge 2x thumb
You argue like a Soviet. By your definition, any profit made by a company can be defined as a subsidy fee if they offer any kind of promotion at any time. What koodo is doing is completely above board, totally legal and not at all shady. They are completely up front about what their prices are, and are under no obligation to disclose the details of why they are what they are.