We often get asked which is better - take the “free” phone deal or buy it outright? We discuss the issues below and try and cut through some of the “marketing” for you.
WHAT ARE THE OPTIONS?
With any ‘phone deal’ you normally have 2 options - The Phone or The “Cash”
1) Take a “free” phone
You get one free handset in return for a 24-month contract on a particular number. Free* always has a disclaimer*. Don’t panic, your phone is technically free but needs a* as there are higher cancellation costs with these plans
2) Take the “cash”
What we will call “cash” comes in the form of either a monthly credit or if you are a larger corporate you may have a technology fund to use. (A third option in larger corporate accounts is no technology fund in return for cheaper call rates)
WHAT TO CHOOSE?
One simple piece of logic is - What is worth more - the phone or the cash?
Business Example
EG Over 24-months on an $80 plan you get either $15 per month totaling $360 or a free phone worth between $409 and $999. So a $409-$999 phone or $360 cash. Take the phone right?
Corporate Plan Example
Over 24 months you get equivalent of $199 per user in a fund or a free phone worth $499. Once again - take the phone right?
There’s a lot more than just the $$ of course…
WHY TAKE THE FREE PHONE
* More Value - As above, you get far more value of hardware than if you had to buy
* No upfront costs
* Opex vs Capex - no ‘budgets’ to get approved
* Fleet Refreshes - great if you need a fleet refresh or in particular want to roll out higher-end devices such as BlackBerry or PDA’s
* Use Data Plans - on some data plans you can get the phone for free, leaving your voice plan to take advantage of the ‘cash’ still (eg BlackBerry Plans). Sometimes it can be the opposite however, take the handset for free on the voice plan and leave your data plan on a casual contract for flexibility - discuss with us your particular strategy to help decide this.
WHY TAKE THE CASH
* Choice - Sometimes the handset you want may not be available for “free” but you can still buy it from us outright
* Lower cancellation fees - understandably if you have been given a free handset the carrier has a right to have a higher cancellation fee to get the cost of the handset back if you choose to leave early. Hint - check the cost of the cancellation fee vs that of the phone.
* More flexibility - in our experience “free phone plans” tend to be less flexible to change before contract expiry (if this is possible at all) - mainly due to the fact they have higher cancellations fees. The rules around this change but ‘in general’ it’s easier to negotiate a different plan in advance of your contract expiry if you bought your own handsets.
* $0 upfront - you can still have $0 upfront by using a Mobile Repayment Option
* Replacement Costs - by taking expensive free phones, you can be setting a new “standard” in handsets that staff expect to keep. If expensive phones get broken outside of warranty, staff expect them to be replaced with the same model which will cost you more. Expensive phones can actually be less fragile due to the styling or PDA design.
Corporates
* Contracts - your individual numbers may have no contracts normally but with a free phone plan they will have a 24-month plan. You therefore can’t add and delete users at will and can end up with lots of spare numbers you have to keep track of.
* Call costs - you may get more value by negotiating cheaper call costs with no free handsets or less technology funds.
CONCLUSION
While we don’t have a hard and fast solution for you we would say:
* Focus on your needs - not wants. Do you need new handsets now? How long will your current fleet last anyway?
* If the ‘cash’ is close to the value of the phone you need (not want) - take the cash
* Pick solutions and value first and handsets last - Don’t let “free phones” drive your plan choice or carrier decision!
* Don’t set a standard you can’t keep - more expensive (& more fragile) handsets may not even be required and you will be obligated to replace them if staff break them!
* Talk to us - to make sure you understand all the future issues.
Talk to Phonenomena
Phonenomena offer fleet management and plan consultancy and have the experience to help you cut through the clutter. Call a Phonenomena Account Manager today to discuss how to optimise your hardware investments.
