Mid contract price increases

VoucherMan

Having just got the Virgin Media price increase email, I'm looking at alternatives. I'm confused about the method of applying the increase.

Virgin are applying the increase to the headline package price, so while I may only be paying £10 a month (£50 package, less £40 discount), they are adding a £7 a month increase! They may consider it a 14% increase, but to me it would be 70% !

Looking at Shell Energy, they state

Your monthly charges may increase each year from 2024 on or after 1 April by the Consumer Price Index (CPI) rate of inflation plus up to 3%. For example, if you're paying £30 per month, and the January CPI figure is 2%, we may apply an increase of up to 5%. At 5%, your monthly price would increase to £31.50 after 1 April 2024

They clearly state that the increase will be on the amount you're paying, NOT the full package price.

(Amusingly, I see that on VMs registration page, the simply state Prices of Virgin Media services may rise during contract. )

Is there a guide anywhere that details how each provider calculates their price increases, or does anyone have examples?

Neil_Jones

Virgin doesn't have an automatic rise so they just say "may rise" because they reserve the right to specifically state what the increase is - its not like the other providers which is CPI+3.9%, which is automatic.

Pretty much all providers work in the same way, the headline increase is on the out of contract rate.  So if you would be paying (for argument's sake) £100 a month and a rate increase comes along of (again for argument's sake) 15%, that's a new rate of £115.

Now let's say you have a retention deal because of ... reasons.  These are not always applied retrospectively, particularly if they were monetary based discounts.  The percentage discounts are more powerful, let's say 50% for this example..  You pay £50 a month, because 50% off £100 is £50..  The charged amount increases by 15%, but you still have a 50% retention deal.  50% of £115, is £57.50, so your actual rate of increase is the same.  If your discount was £50 per month off, then your increase goes to £65, making it a 30% rise, not the advertised 15%.

It gets more complicated depending on what goes up and where it goes up from and to (many providers tend to increase rental, bundles, broadband on their own) but the net rise varies for different people.  15% of £10 is only an extra £1.50 a month for an all inclusive calls package for example, but 15% up of the broadband that started at £25 per month is £3.75.

To answer the original question, it sounds like you have a monetary based discount, not a percentage one.

VoucherMan

Thanks for the breakdown.

Neil_Jones said:

Virgin doesn't have an automatic rise so they just say "may rise" because they reserve the right to specifically state what the increase is - its not like the other providers which is CPI+3.9%, which is automatic.

It looks like they've now come into line with most other providers. I think I read something to that effect on the MSE site somewhere. (and they're using RPI, instead of CPI)

From VM

We're changing our pricing terms

Currently, we usually change our prices each year, and will write to let you know how much any increase is and provide you with a right to cancel. From April 2024, we are changing our approach so any price rise to your package is always made at the same time every year, and it’ll be linked to the Retail Price Index (RPI) rate of inflation plus an additional 3.9%, so the amount of any increase will be clearer, sooner. To do this, we need to change our terms and conditions. The key features of these new rules are:

The monthly subscription price for your services will increase every April starting from April 2024.

The amount the monthly price will increase will be RPI rate of inflation plus an additional 3.9%. This increase will apply to the monthly subscription price you're paying at the time and also (if applicable) to the monthly price payable after subsequent expiry of any applicable offer or discount.

The RPI rate will be the amount that is announced in the preceding February of that year, so you will be able to work out the exact increase from that date.

If the RPI is 0% or less, then your price will increase by 3.9%.

We will publish the relevant RPI rate on our website as soon as it becomes available.

	As this annual price increase is provided for in your terms, there is no right to cancel given for this price increase from April 2024.

Neil_Jones said:

To answer the original question, it sounds like you have a monetary based discount, not a percentage one.

I think all discounts from VM are. Certainly, all the packages I've had over the years are for a fixed £ reduction.

The issue now is that VM customers will be unable to cancel, so won't be able to avoid the massive hikes in future.

Neil_Jones said:

Pretty much all providers work in the same way, the headline increase is on the out of contract rate. 

Looks like I'll be taking my chances with Shell, Unless VM come up with a really good counter. Their promotional terms do read more favourably. They also offer a free line install, which I'll need. Some others charge for it.