free for 12 months on contract????

goldrush1984

Hi tell me if im being stupid but im looking for a phone on contract- any network etc i have seen a few 'clearance' phones and theya say its free for eg12 months length of contract, so what do you actually pay for then, im totally confused, does anyone have ideas???

thanks katy

nnhf

you still have to pay for them as normal, but they will give you cash back twice or 3 times in 12 months.

skiddy2k

correct, you pay £30 or whatever it states on the website and apply for cashback. dont understand how the companies makes any money though.. some companies ask for a one-off fee of £1 or £10 and you dont have to pay anything else, they dont need any creditcard details, unless you use more than your inclusive miniutes/texts.

allways been puzzled about how they do that

Mobile_Mole

skiddy2k wrote:

dont understand how the companies makes any money though.

The retailer earns its commission from the network for getting the customer to commit to a contract. This commission is used for the cashback. If all the cashback is successfully claimed then the profit made by the retailer is small, but enough units are usually shifted to make it worthwhile. Plus a high proportion of cashback customers will either forget or get caught out on the cashback Ts and Cs.

Cheers
Mark
Mobile Mole

skiddy2k

does that mean the network gives over £300 cashback to the retailer... plus the phone? true, can make money from people not getting cashback, but this rarly happens.
where does the network make its money if most the money we pay the network goes into commision?

skiddy2k

oh yeah! sorry, forgot most the time they dont come 12months free!

*!*HIBS*!*

nnhf wrote:

you still have to pay for them as normal, but they will give you cash back twice or 3 times in 12 months.

The amount of times needed to claim your cashback may vary between the companies.

skiddy2k wrote:

does that mean the network gives over £300 cashback to the retailer... plus the phone?

Just to add to Mobile Mole's comments, the network pays the company something like £200+? commission for each contract. I think they would get more for higher tariffs. They get bonuses for reaching a certain sales target (set by the network, I think). By creating these free line rental on 12 months contracts they can get more people to sign up so they get more commission.

true, can make money from people not getting cashback, but this rarly happens.

Some companies say (in their T&Cs) that if you miss one claim the rest would be declared invalid, so you will not be able to submit further claims.

where does the network make its money if most the money we pay the network goes into commision?

The network makes it money when people use more than their inclusive allowance, buy things that are not included e.g. message bundles, premium texts, mobile internet to name a few etc...

Mobile_Mole

skiddy2k wrote:

true, can make money from people not getting cashback, but this rarly happens.

I think the opposite applies. Many customers either forget cashback claims or fail to stick to the Ts and Cs. The retailers factor this in to their calculations.

*!*HIBS*!* wrote:

skiddy2k wrote:

where does the network make its money if most the money we pay the network goes into commision?

The network makes it money when people use more than their inclusive allowance, buy things that are not included e.g. message bundles, premium texts, mobile internet to name a few etc...

Very true. More importantly, the networks hope that after the initial contractual period has ended you will either do nothing and remain on the same tariff or 'upgrade' and commit to another contract. Both options of course do not provide any cashback for the customer.

Cheers
Mark
Mobile Mole

skiddy2k

cheers guys! never knew how they make money!... must be hard to decide wether to default the cashback or not... either they make more money, but loose customers, have unhappy customers and a bad reputation (thanks to sites like MSE) or they make less money , retain the customers and a better reputation
... problem is people with bad experiences complain alot and make their voice heard by everyone, people with good experiences dont compliment as much... human nature sadly