How do people feel about "effective" pricing ?

jasonwatkins

I know many will simply say that it's "no effort at all to submit your bills" e.t.c, which it clearly isn't, but in real-world terms, you're still paying the full quoted price for the contract and you're just getting a small amount of money in your pocket every three months (or thereabouts) to spend on something else.

I've always personally felt it's somewhat of a false economy really.   And yes, I know i'm in a minority, but I'm someone who likes to know what's going out of my account each month.

Sitting there and saying "Wow, I've only "effectively" paid £4 a month for that SIM" just doesn't work for me.

Although the one thing that always tickles me is that many, many people seem to take that opinion as not understanding how it works for some bizarre reason.

flashg67

I agree, the real cost to me is what I see going out of my bank every month. The occasional trickle that comes back just gets swallowed up in day to day stuff. Even a prepaid card would probably go on a weeks shopping or whatever. I suppose if I put cashback to one side and saved it, I might feel the benefit, but I never have so far   

molerat

You are obviously failing to manage your budget correctly then.  My spreadsheet shows my annual budget for bills, the monthly payments come out of that and any cashback / rebate etc earned goes back into that account so the "effective" price is what I am paying.

jasonwatkins

molerat said:

You are obviously failing to manage your budget correctly then. 

I'm really not.

flashg67 said:

I agree, the real cost to me is what I see going out of my bank every month. The occasional trickle that comes back just gets swallowed up in day to day stuff. Even a prepaid card would probably go on a weeks shopping or whatever. I suppose if I put cashback to one side and saved it, I might feel the benefit, but I never have so far   

I've seen one person try to justify the "effective" cost of something by including an amazon voucher as a way of reducing the cost.   I get why people do it but it's just not for me because it's not real.

SnowTiger

jasonwatkins said:

I know many will simply say that it's "no effort at all to submit your bills" e.t.c, which it clearly isn't, but in real-world terms, you're still paying the full quoted price for the contract and you're just getting a small amount of money in your pocket every three months (or thereabouts) to spend on something else.

I've always personally felt it's somewhat of a false economy really.   And yes, I know i'm in a minority, but I'm someone who likes to know what's going out of my account each month.

Sitting there and saying "Wow, I've only "effectively" paid £4 a month for that SIM" just doesn't work for me.

Although the one thing that always tickles me is that many, many people seem to take that opinion as not understanding how it works for some bizarre reason.

I think it depends how big your 'budget window' is.

 'Effective' monthly cost may be difficult to get your head around if you only look ahead to the end of the week or end of the month.

I use cashback deals.  Presumably you don't.

While, for a similar service, I may pay more some months than you; over the course of a year I probably pay less.

That tickles me.  However, I'm extremely grateful to people who don't take advantage of cashback deals because they are effectively subsidising me.  Thank you.

jasonwatkins

Again we have this assumption that effective pricing is akin to quantum physics and that you must be stupid if you don't use it.

And you can presume all you like because you'd be wrong.   I use cashback deals whenever I can.   I switch energy providers almost on a yearly basis and I use cashback whenever it's possible.

I also use cashback for the vast majority of my online purchases as well.

Perhaps you can educate me why people who use effective pricing for things defend their choice so aggressively?.   There's rarely any appreciation of why someone might choose not to or of their opinion on effective pricing.   It's usually either condescending insults and implications that you don't understand it or just flat out aggression and accusations that you're stupid.

DebtHurricane

jasonwatkins said:

Again we have this assumption that effective pricing is akin to quantum physics and that you must be stupid if you don't use it.

And you can presume all you like because you'd be wrong.   I use cashback deals whenever I can.   I switch energy providers almost on a yearly basis and I use cashback whenever it's possible.

I also use cashback for the vast majority of my online purchases as well.

Perhaps you can educate me why people who use effective pricing for things defend their choice so aggressively?.   There's rarely any appreciation of why someone might choose not to or of their opinion on effective pricing.   It's usually either condescending insults and implications that you don't understand it or just flat out aggression and accusations that you're stupid.

Have to completely agree with you on this. I’ve used cashback before, for example by paying more for broadband but then getting a chunk of money back in the form of a voucher. It was planned and so it worked out ok, but honestly it was a lot of effort to try not to let the ‘savings get swallowed up in everyday life. 

I am all for getting a bargain, but I too look at what actually comes out of my bank account each month. 

mgfvvc

jasonwatkins said:

I know many will simply say that it's "no effort at all to submit your bills" e.t.c, which it clearly isn't, but in real-world terms, you're still paying the full quoted price for the contract and you're just getting a small amount of money in your pocket every three months (or thereabouts) to spend on something else.

I don't like it and I would very much prefer to just have it knocked off the price up front but, at the end of the day the cost of the contract is what I have paid over the life of the contract. Effective pricing reflects that fact. How you deal with the saving not being a regular saving is entirely up to you, but it is a genuine saving. I have other bills that fluctuate and I don't complain that savings on those aren't genuine.
Rationally, if you get money back, it's a real world saving. In "You pay the full quoted price and you get money back ..." the key point is that you get money back, so overall they get less of your money and you get more of it.

Takmon

flashg67 said:

I agree, the real cost to me is what I see going out of my bank every month. The occasional trickle that comes back just gets swallowed up in day to day stuff. Even a prepaid card would probably go on a weeks shopping or whatever. I suppose if I put cashback to one side and saved it, I might feel the benefit, but I never have so far   

This is a good example of how not managing money properly means you can't take advantage of these kinds of deals effectively (I'm not picking on you specifically because this happens to a lot of people).

So my wages go into a bank account and nothing else comes out that account but automated standing orders and this put's money into various savings accounts and a weekly amount to one account for spending plus a calculated amount for bills to a bills account. 
All my bills come out of my bills account (which also pays cashback on direct debits). So this cashback and any other cashback amounts go into this account only and this money is not spent so it pays the bills and i only have to transfer in the "effective price". The buffer i have in the account will mean it won't go overdrawn while waiting for the cashback.

So if you allow cashback or any other extra money to be "swallowed up in day to day stuff" your not managing your money very well.

[Deleted User]

With sim only, I'm weary of the multiple cashback route as I was burned before.
Auto-cashback is fine.

jcontest

jasonwatkins said:

I know many will simply say that it's "no effort at all to submit your bills" e.t.c, which it clearly isn't, but in real-world terms, you're still paying the full quoted price for the contract and you're just getting a small amount of money in your pocket every three months (or thereabouts) to spend on something else.

I've always personally felt it's somewhat of a false economy really.   And yes, I know i'm in a minority, but I'm someone who likes to know what's going out of my account each month.

Sitting there and saying "Wow, I've only "effectively" paid £4 a month for that SIM" just doesn't work for me.

Although the one thing that always tickles me is that many, many people seem to take that opinion as not understanding how it works for some bizarre reason.

I took out a contract for £10 a month, got £57 back, 12 month contract.

There has been inflation sure, but lets ignore that.  I have "effectively" paid £5.25 a month instead of £10.  By your "logic" I should have just took out the £8 option from another supplier.  So I get to pay £33 more and not live in a false economy?.

I still view it as £20 going out of my account each month (I took out 2 plans), and just view it as me receiving a single £114 bonus for being a customer.  You shouldn't learn to look at it both ways instead of simply trying to view it one way.

I have been offered "discounts" before on products, either £50 up front or £5 a month for a year applied to the bill.  It's amazing how many people will go for the £50.  People like that (and you I take it) tend to pay more so people like me can get the discounts.  On that note, thanks .