It has been like that for a while. If you had money just buy phone directly from Samsung or their retail.
Thank you Dinh.
You don’t even need money up front because they have 0% financing OAC.
TL;DR: they do this to incentivize you to provide them a stable recurring revenue stream.
Longer version:
Think of the Telecos as independent resellers, to at least some degree free to set their own pricing nsubject to any restrictions in the agreements between them and the phone manufacturers].
In an ideal world, their “full price” and the manufacturer’s regular pricing would be the same as each other and the MSRP, and the would match each other for any sales/promotions. If they were just a retailer, then this would be more likely to be true; In the case of a Teleco, yes they will make some $ on the sale of the phone, but the real cash-cow is the ongoing revenue you give them every month in your service plan.
Thus, it is in the Telcos’ interest to incentivize you to use their tab systems. If you still want to buy the phone from them without taking a tab, then they’re usually happy to sell you one but at a higher price. If you want to buy the phone outright, as noted you’re probably better off buying it direct--or at least considering that option and comparing the pricing and overall cost over the anticipated time you will use it.
By setting their full price a littler higher and then enticing you to sign up for a tab by bringing the price back down to something more palatable via tab discounts, they are encouraging you to stay with them longer and provide them a more stable monthly source of recurring revenue. You are of course free to leave without penalty but would have to pay off any remaining tab balance and I believe now also a prorated portion of the tab bonus you received, thus incenting you to stick with them at least until that’s all back to zero.
From this perspective, though it sucks, it should be pretty clear why they set their pricing and promotions the way they do.
@srlawren Good explanation. It is very clear to me why they set their pricing the way they do. However, I wanted to share this concrete example with others. I still saved some money buying from Koodo in this specific case, but the apparent distortion of the Tab Bonus bugged me.
@Cailie Crane totally, it bugs me too. Everyone’s situations vary (plan needs, up-front funds available, anticipated length of time to keep the phone, etc.) so it’s important to try to factor all that in to one’s individual purchase decisions. Sounds like you did that and it worked out well for you in the end!
It's common place now too in Canada. It can be cheaper if you get the large tab bonus, and don't intend to leave Koodo during that time. It ends up being up to you if you know you won't be moving around.
Thank you Dinh.
You don’t even need money up front because they have 0% financing OAC.
just beware of the fine print charges with those 0% financing. I was thinking of going that route until I found out about the monthy service fees. So I just bought my S23U outright from Samsung.
@nonci Definitely! Great advice. 0% financing with monthly fees is another gotcha. Thanks for pointing that out.
CRTC actually did a review of this last year. See Telecom Decision 2022-294. In short, they can charge as much as they want when selling the device outright, but in terms of cancellation, the early cancellation fee must be calculated using the regular price of the device on Samsung's website, if that's a better. If the tab balance is the early cancellation fee, then I would definitely complain to the CCTS if you decide to cancel. Otherwise I'm not sure it makes much of a difference. They would probably just reduce the amount of your tab/tab bonus by the same amounts, meaning you'd still pay the same every month.
