Why dont consumers understand that cell phones cost a lot?

[-GoBengals-]

A few times a day I hear, when a customer has broken or liquid damaged their device, and are told they must go through insurance and pay the $100 deductible, they say "what?!? i can buy a new one for less than that"

why do comsumers think cell phones cost like $15 to manufacturer?

wireless companies pay OUT THE ASS for theese devices.

In my current job I can see the true cost to the company of each device. and its obviously not the full MSRP like the $449-499 listed on most smartphones, but its high, full cost on a samsung epic is $499, it sells for $99 these days. and the cost is within $5 of $370 for the company to buy from samsung.

the wireless company is taking a $270 loss on the device in exchange for a 2 year agreement. in which they hope to recoup that less over 24 months of paid service.

(this is why cancellation fees have risen so much in the laast year across all carriers. standard flip phones typically ahve a "loss" of about $50-100 max.. so its no biggie to recoup that. now with $250-450 losses per device. they are requiring $350 cancellation fees to offset customers who leave.

it never skips a day, every single day I hear a customer devalue products, which i feel is a direct corelation to how poorly people treat their cellphones. i see phones that look like they have been run over in a gravel pit. painted with nail polish, etc...

wireless companies brought this on themselves with the whole "free phone" craze to earn customers years ago. but consumers are being forced to be accountable for their actions and the push back is mind numbing.

in other countries there are no contracts, and phones cost HUNDREDS of dollars for the same device thats $49-99 here...

consumers complain about contracts, the cost of phones and the cost of service..

and wireless companies struggle to make profits while trying to keep both device and service costs low..

i think they should advertise the no-contract option a lot more. giving at least SOME awareness to the consumer how much that device is worth in reality.



and while i am at it i guess, a rant about refurbished phones..

in the first 6-9 months a device is out, there arent any refurbished phones, for a few months the manufacturer wants all returns sent to them for defect finding and potential software fixes they need to push. and up to the first YeAR, you probably have a 20% chance of getting a refurb. the phone makers often give the carriers a 10-50k devices not in retail boxes for exchange. so just because it comes in a small refurb box, doesnt mean it was ever refurbished.

if it IS refurbished, the ONLY thing re-used on the device is the motherboard, they are stripped, cleaned, tested and rebuilt with OEM parts, tested again and then used. customers have a huge stick up their ass about refurbs. and somehow feel they deserve brand new phones for their whole life if a replacement is needed... problem is, your phone is now used and has little to no value. so no, the carrier isnt going to shell out another $350-$650 for a new smartphone brand new for you for a phone you have used and abused for a year.

and lastly, please dont pretend you didnt get your phone wet. do you take your phone into the bathroom when you shower? (of course you do) all that condensation over a year can easily trip liquid indicators. and rust parts inside. but also, if you have put it in a bag of rice to try to get it working, we will see rice inside, some IS getting in. and it will be oxidised coroded and tripped inside... there is no denying it... so stop lying...

and you threatening to switch carriers doesnt scare anyone.. go ahead, youll have hundreds in cancellation fees and then new activation fees and new phones to buy... please..

[-GoBengals-]

and i didnt intend for it to be a big bitching post.. more of a "its strange that people have to value for this stuff, its outrageously expensive... and people treat it like shit and make crazy statements and demands and sound foolish in the process...

[|Elflocko|]

No one wants to pay a reasonable price for anything anymore due to the "Always the Low Price" brainwashing of the last 20 years.

And for the record, I never take my phone into the bathroom. Sure, if I'm at work and need to go it's in my pocket, but I don't use it while using the toilet, and it stays on the nightstand if I'm taking a shower.

I just have a bad habit of dropping shit...

[-GoBengals-]

ha, good plan, but youre right, everything is devalued, im all for finding a good deal. i search the internet use coupon bundles and stuff to score a deal.. but i realize what im saving and what its worth.. and im not making threats and oblivious to the reality of the cost of things..

its kind of shocking how many customers accuse me of lying about how much phones cost us... somehow a cordless home phone at $99 is reasonable but magically a world traveling internet picture video music phone that can go to many countries costs like $5 to make in their mind...

[Lewdog]

When I worked at a cell phone companies I used to always get the question, "Why do new customers get a better deal on a phone than a person who has bee a customer for 2 years and is redoing their contract?" I honestly never had an answer.

[esjbh2]

[quote name='Lewdog' timestamp='1335460817' post='1122028']
When I worked at a cell phone companies I used to always get the question, "Why do new customers get a better deal on a phone than a person who has bee a customer for 2 years and is redoing their contract?" I honestly never had an answer.
[/quote]
Sadly more businesses seem to be following this model lately. They are more concerned with grabbing new customers than keeping the good customers they already have. I guess the philosophy is that as long as they get new customers faster than they lose old customers they are doing great. Completely backwards if you ask me.

Go, I think you honestly answered your own question. People "perceive" value and cost of merchandise by the lowest price they see. When phone companies give away phones are part of contracts, the phone gets "devalued" at least in thier perception. Sadly, perception then becomes reality for them. If I were in charge, I set fair prices for everything and be consistent, i.e. no more of this playing games by giving something for free to get saddled with an expensive long term contract. Like I said with the new versus old customers, sadly, more and more businesses seem to be going to this business model too.

[-GoBengals-]

they dont. its the same deal, and the correct answer would have been "we already lost our ass on giving you a good deal once.." or if they havent fullfilled the deal yet and arent eligible for good pricing: " you havent fulfilled the contract you greed upon, breaking that contract is the difference"

but these days its 100% the exact same cost across the board new and current customers activation fees for both, etc..all carriers do it the same, which makes it easier in that regard..

offtopic: they have begun turning off some nextel towers.. they shut down about 30% in my area on tuesday... i am enjoying it...

customer: what? i dont get service there, why didnt anyone tell me this, im sueing you!"
sprint: so you didnt get the 6 inserts in your bill? you didnt get the 3 emails we sent you? you didnt get the flyer we mailed to you? the 6 text messages that we sent that are showing read in your inbox? or the three voicemails?

sprint offered free phones to convert all of these customers to CDMA starting a YEAR ago.. i have never seen so many threats of legal action in my life... people have issues..

you were warned a TRILLION times....

any nextel customers here? i can tell you when the network "thinning" starts in your area if needed..

[-GoBengals-]

[quote name='esjbh2' timestamp='1335462732' post='1122066']
Sadly more businesses seem to be following this model lately. They are more concerned with grabbing new customers than keeping the good customers they already have. I guess the philosophy is that as long as they get new customers faster than they lose old customers they are doing great. Completely backwards if you ask me.

Go, I think you honestly answered your own question. People "perceive" value and cost of merchandise by the lowest price they see. When phone companies give away phones are part of contracts, the phone gets "devalued" at least in thier perception. Sadly, perception then becomes reality for them. If I were in charge, I set fair prices for everything and be consistent, i.e. no more of this playing games by giving something for free to get saddled with an expensive long term contract. Like I said with the new versus old customers, sadly, more and more businesses seem to be going to this business model too.
[/quote]

the old customer/new customer thing isnt a current practice, and really hasnt ben in more than 5-6 years.... in fact, for a LONG time, new customers got hosed with activation fees and there were no upgrade fees, so it was the current customer saving $36/phone. but thats all evened out these days..

a carrier is taking a $450 hit per iphone sold. even if you sell $100 in accessories and the upgrade fee, thats about $110 made back, still a $340 loss...thus the $10 premium unlimited data add on was created $10 x 24 = $240... still $110 to recover with the plan, but profit is at least possible at that point.

I agree with the fair price thing. i wish we charged a set monthly fee offering 2 different plans and charged full cost on phones... would be much easier..

but the first company to try that goes bankrupt in this economy and this market...

i guess the bold lying from consumers is what gets me the most. they have been partially trained to lie and be rude and yell to try to get better deals.

sales is no longer kissing the most ass, its providing the most service. and the transition form one to the other has been BRUTAL...

[ValleyBengal]

Quite frankly, I know why the US carriers do not advertise off contract options more. The US minute and data plans absolutely gouge the customers currently, and the only way they can sell the customer on those high prices is by packaging a nice phone with a subscription plan. Typically, the phone is also carrier locked, so you're tied up for two years minimum. In Europe, where cell phone companies have much more direct competition, plans are much cheaper based on my experience. It has in my opinion a lot to do with people much more willing to pay for unlocked and full price on phone, and not being locked into costly long term contract. This in turn spurs more competition, because both phones and plans must be cheaper since customers can switch at short notice.

But in other things, I agree with you. People are absolutely idiots when it comes to knowing what these phones cost.

[-GoBengals-]

[quote name='ValleyBengal' timestamp='1335463672' post='1122082']
Quite frankly, I know why the US carriers do not advertise off contract options more. The US minute and data plans absolutely gouge the customers currently, and the only way they can sell the customer on those high prices is by packaging a nice phone with a subscription plan. Typically, the phone is also carrier locked, so you're tied up for two years minimum. In Europe, where cell phone companies have much more direct competition, plans are much cheaper based on my experience. It has in my opinion a lot to do with people much more willing to pay for unlocked and full price on phone, and not being locked into costly long term contract. This in turn spurs more competition, because both phones and plans must be cheaper since customers can switch at short notice.

But in other things, I agree with you. People are absolutely idiots when it comes to knowing what these phones cost.
[/quote]

very true. at once point both sprint and tmobile offered no contract plans with full price phone purchase, it was a different cost structure, but it wasnt advertised really at all, the uproar over both having to sign a deal and paying more was one no one wanted to tackle...

i really enjoyed, 4 years ago, when sprint sent letters to all of the non-profitable customers telling them they had 90 days to switch carriers with no cancelation fee.. customers who were roaming all the time or once who went to different locations getting phones exchanged every 60-90 days, and ones who called ccare non stop trying to get money off the bill... all kicked to the curb...the only time in the history of the world that crappy customers were held accountable for their crappy actions...

[ValleyBengal]

And I'm still waiting on someone to start a class action lawsuit for tethering plans. That one I still scratch my head how they get away with it. I have to pay extra to get my data when I connect my phone to a secondary device? But yet it costs the carrier nothing on their end since the data is not any different if you used phone based data services vs. using your phone as a hotspot? You already have data caps in place, it should be up to the user if they want to use it up on their phone or a secondary device.

[steggyD]

Maybe Sprint should pay their taxes ...

[url="http://www.forbes.com/sites/ericsavitz/2012/04/19/sprint-sued-by-new-york-state-for-300m-in-back-taxes/"]http://www.forbes.com/sites/ericsavitz/2012/04/19/sprint-sued-by-new-york-state-for-300m-in-back-taxes/[/url]

Just messin' with ya. I agree. Phones are tiny little computers with GPS chips, dual core processors, gigs of RAM. Crazy shit in phones these days, have to cost a pretty penny.

[|Montana Bengal|]

http://www.cnn.com/video/?hpt=hp_c2#/video/bestoftv/2012/04/27/ym-iphone-teardown-costs-manufacturing.cnn

Can't watch it right now, but it might be interesting.....

[color=#FFFFFF][font=sans-serif][size=4][b]The true cost of an iPhone[/b][/size][/font][/color]

[sois]

[quote name='GoBengals' timestamp='1335396220' post='1121686']

wireless companies brought this on themselves with the whole "free phone" craze to earn customers years ago

[/quote]

you reap what you sow

you conditioned the customers to feel that these things are disposable

[Vol_Bengal]

Honestly, I think it is by and large because a lot of people are just dumb. I'm being serious. Its why, as a country, we're in the shape we're in. These same people are more worried about Jersey Shore, etc. than what is really happening.


Aside from that though... I agree with the premise that the phone providers are devaluing the piece of equipment. At least in the mind of the buyer. Its the same thing with the fast food dollar menus, Taco Bell $5 lunch box, etc. You're telling the consumer to come to you as you'll give them the cheapest option out there. The problem is that once you start down that road its tough sell to switch course and go another route, that, in the eyes of the buyer, is costing them more. I give kudos to the Mercedes Benz, Apple, Lexus, etc manufacturers out there that essentially say "our product is damn good and isn't a fit for everyone. But those that get to experience it pay a premium for the opportunity"... its marketing genius.

[-GoBengals-]

[quote name='ValleyBengal' timestamp='1335465611' post='1122109']
And I'm still waiting on someone to start a class action lawsuit for tethering plans. That one I still scratch my head how they get away with it. I have to pay extra to get my data when I connect my phone to a secondary device? But yet it costs the carrier nothing on their end since the data is not any different if you used phone based data services vs. using your phone as a hotspot? You already have data caps in place, it should be up to the user if they want to use it up on their phone or a secondary device.
[/quote]

all thats not entirely true. Tethering the device is a pass throuh for the data, so it cane use SOOO much more, the average tethered device uses 8-10gb monthly, and the average untethere uses less than 1GB of data monthly. and sprint doesnt have ANY data caps on phones, you can use 100GB on your device if you can muster it. im just talking averages. so charging for the highest 1-3% users is the name of the game. they are bandwidth hogs, and should pay for using extra data. playing a youtuve video on your device and on your tablet or computer is a HUGE different.. an hour of youtube on your phone is probably 125MB-250mb, an hour on your tablet or computer is 750mb-1.5gb..

and thats slowing down any other users on that tower at a certain point. so think of a city, a tower with 250 users(this is about what you would see in a mason, ohio or somewhere. the tower literally has T1 lines running to it that it is shooting over the airwaves, those lines cost over $400/month, is the top 1-3% is using enough data to require a whole additional T1 line, that cost has to be covered. now imaginechicago or new york, when youll have thousands of people on each tower, where towers are a few blocks apart due to capacity alone instead of 5-6 miles apart, and having to add 1,2,3 more data lines to each tower because of how many people are tethering. you could spend a few million dollars a MONTH in a 10 square mile area of ny or chicago just based on tethered users. think how many college kids or people living alone running netflix or hulu and laptops off their tethered devices in a place like that? the cost of that data increase is astronomical

[-GoBengals-]

[quote name='steggyD' timestamp='1335506032' post='1123446']
Maybe Sprint should pay their taxes ...

[url="http://www.forbes.com/sites/ericsavitz/2012/04/19/sprint-sued-by-new-york-state-for-300m-in-back-taxes/"]http://www.forbes.co...-in-back-taxes/[/url]

Just messin' with ya. I agree. Phones are tiny little computers with GPS chips, dual core processors, gigs of RAM. Crazy shit in phones these days, have to cost a pretty penny.
[/quote]

haha, yea the tax thing is funny, there was an internal release about it. the jist of it is that ny tax requires a ny tax on recurring service charges, and how its defined it doesnt include a la cart add ons or purchases made on a one by one basis, etc.. and whoever has a stick up their ass there is trying to say all of that stuff counts as the recurring revenue portion and should be taxed, which is not the case, according to their own tax laws. since sprint offers plans the old way(people still on a $xx minute plan plus a $xx messaging and $xx data fee, which has no contract(the add ons) and the new way(all in one plans) they are paying taxes on the newer style plans since its one service charge and not paying it on the old style plans since its an add on and not a standard service fee.

they claim sprint owes just under 100 mil which is maxed out with fines could be 300 mil, which they would not only have to prove they owed anything at all, but that sprint knew they owed it and purposely withheld it. neither of which is likely to happen..

so if they have to pay ANYTHING it would be 100 mil-ish. which is not that serious really....

but back to the phones, yea, its insane what goes into these things, people just dont see the cost for some reason.

[-GoBengals-]

[quote name='Vol_Bengal' timestamp='1335783844' post='1127431']
Honestly, I think it is by and large because a lot of people are just dumb. I'm being serious. Its why, as a country, we're in the shape we're in. These same people are more worried about Jersey Shore, etc. than what is really happening.


Aside from that though... I agree with the premise that the phone providers are devaluing the piece of equipment. At least in the mind of the buyer. Its the same thing with the fast food dollar menus, Taco Bell $5 lunch box, etc. You're telling the consumer to come to you as you'll give them the cheapest option out there. The problem is that once you start down that road its tough sell to switch course and go another route, that, in the eyes of the buyer, is costing them more. I give kudos to the Mercedes Benz, Apple, Lexus, etc manufacturers out there that essentially say "our product is damn good and isn't a fit for everyone. But those that get to experience it pay a premium for the opportunity"... its marketing genius.
[/quote]

good comparison with Apple. an ipad with 16gb ram and a CDMA chip for data is like $650. just by size comparison people should assume smartphones with equal specs would be in the $400-450 range..

the iphone is actually helping the cause for customers. since no one is being granted early upgrades for them and asurion insurance isnt offered when its shattered or lost the customer is given the $650 price tag...and paying it...

of course if more than half the customers get iphones i MAY end up out of a job....

[ValleyBengal]

[quote name='GoBengals' timestamp='1335801550' post='1127524']

all thats not entirely true. Tethering the device is a pass throuh for the data, so it cane use SOOO much more, the average tethered device uses 8-10gb monthly, and the average untethere uses less than 1GB of data monthly. and sprint doesnt have ANY data caps on phones, you can use 100GB on your device if you can muster it. im just talking averages. so charging for the highest 1-3% users is the name of the game. they are bandwidth hogs, and should pay for using extra data. playing a youtuve video on your device and on your tablet or computer is a HUGE different.. an hour of youtube on your phone is probably 125MB-250mb, an hour on your tablet or computer is 750mb-1.5gb..

and thats slowing down any other users on that tower at a certain point. so think of a city, a tower with 250 users(this is about what you would see in a mason, ohio or somewhere. the tower literally has T1 lines running to it that it is shooting over the airwaves, those lines cost over $400/month, is the top 1-3% is using enough data to require a whole additional T1 line, that cost has to be covered. now imaginechicago or new york, when youll have thousands of people on each tower, where towers are a few blocks apart due to capacity alone instead of 5-6 miles apart, and having to add 1,2,3 more data lines to each tower because of how many people are tethering. you could spend a few million dollars a MONTH in a 10 square mile area of ny or chicago just based on tethered users. think how many college kids or people living alone running netflix or hulu and laptops off their tethered devices in a place like that? the cost of that data increase is astronomical
[/quote]

Great, so cap/charge the users that are bandwith hogs, not the way you access your data. Again, in my opinion, tethering should not be an extra charge, but excessive data usage should be. Quite frankly, I want to be able to check my email in an emergency on my laptop if Wifi isn't available without paying a premium through tethering.

In other words, I don't expect the data amount to be free that I use, but I expect not to be charged extra for the method I access the data with.

I consider it like leasing a car. I get 12000 miles a year, which i can drive which ever way I want to. Nobody can tell me where I can drive my car, nor how fast/slow I drive. If I go over I pay.

And quite frankly, why are they selling wireless high speed access plans for use with in- home access points to supplant wired providers like cable or fios if they are so concerned with bandwith? Wouldn't that suck up a lot of it? To me, it all comes down to generating maximum profits with BS plans and services. In Europe and asia providers know they couldn't get away with it, hence tethering plans aren't offered. There, you pay to play (i.e. you get charged for the data amount, not how you access it).

[MichaelWeston]

Hey go, thinking about getting an iphone 4. I am on a pretty fixed budget so I have been very very reluctant to do so. I was excited to see that I can get an I phone 4 for just $100. Went into buy it and then they add on $30 to activate it. Then I pay an extra $30 a month to get a data plan, then I up my insurance from 5 to 10 a month and then if my phone breaks I owe $170 to get it fixed? Is all of this accurate? I might still do it anyway but that really adds up.

Also does anyone know where I can get a cheap cover?

[-GoBengals-]

[quote name='ValleyBengal' timestamp='1335805923' post='1127549']

Great, so cap/charge the users that are bandwith hogs, not the way you access your data. Again, in my opinion, tethering should not be an extra charge, but excessive data usage should be. Quite frankly, I want to be able to check my email in an emergency on my laptop if Wifi isn't available without paying a premium through tethering.

In other words, I don't expect the data amount to be free that I use, but I expect not to be charged extra for the method I access the data with.

I consider it like leasing a car. I get 12000 miles a year, which i can drive which ever way I want to. Nobody can tell me where I can drive my car, nor how fast/slow I drive. If I go over I pay.

And quite frankly, why are they selling wireless high speed access plans for use with in- home access points to supplant wired providers like cable or fios if they are so concerned with bandwith? Wouldn't that suck up a lot of it? To me, it all comes down to generating maximum profits with BS plans and services. In Europe and asia providers know they couldn't get away with it, hence tethering plans aren't offered. There, you pay to play (i.e. you get charged for the data amount, not how you access it).
[/quote]

valid point actually, it comes down to marketing for sprint "unlimited data, no caps, etc" and its true and perfect for 95% of users...and 5% people are in your boat...

[-GoBengals-]

[quote name='MichaelWeston' timestamp='1335828990' post='1127634']
Hey go, thinking about getting an iphone 4. I am on a pretty fixed budget so I have been very very reluctant to do so. I was excited to see that I can get an I phone 4 for just $100. Went into buy it and then they add on $30 to activate it. Then I pay an extra $30 a month to get a data plan, then I up my insurance from 5 to 10 a month and then if my phone breaks I owe $170 to get it fixed? Is all of this accurate? I might still do it anyway but that really adds up.

Also does anyone know where I can get a cheap cover?
[/quote]

switch to sprint and pay half as much per month? let me know if interested and I have to send you a special link to get signed up with a certain code..

[MichaelWeston]

[quote name='GoBengals' timestamp='1335831905' post='1127654']
switch to sprint and pay half as much per month? let me know if interested and I have to send you a special link to get signed up with a certain code..
[/quote]

I am certainly not married to Verizon, other then the fact my wife and I both have Verizon so we get tons of free minutes. I have been with Verizon forever for no real good reason. My bill will be about 150 a month when we both have iphones. Any idea how much it will be with sprint?

[-GoBengals-]

it would be $100 + taxes...

[MichaelWeston]

[quote name='GoBengals' timestamp='1335842156' post='1127706']
it would be $100 + taxes...
[/quote]

Wow, that would be awesome. I just looked it up from the sprint webpage and it said for what we were looking for in plans it would be 150