Why are these cell plans sold this way?

January 11, 2011 2:11 PM

Can you explain Australian prepaid phone service to me? Why do you get more credit than the dollars you paid?

For instance, on Vodafone, you spend $29 to get $150 of credit. Which sounds great but then you spend that credit at very high rates like $0.89. Similar deal at Optus where $19 gets you $70. Is there some reason for this weird pricing structure?

(What I've seen in other countries is that your money either gets you a set number of minutes, or gets you one-to-one dollar credit.)

posted by smackfu to Technology (12 answers total)

It's called a confusopoly, and it hides the real cost of the service, from any provider. Of course, once one company starts in with the absurd inflated amounts, the others have to compete, or their posters don't look as appealing.

The same occurs with post-paid accounts, with inflated 'cap' figures.
posted by pompomtom at 2:20 PM on January 11, 2011

It's similar to some of the deals that you get in the UK- I think it's just marketing bullshit. Spend £20 and get £60 of credit sounds good but the rates are normally so poor compared to a deal that would get you £20 for £20 that it is virtually meaningless.

Factor in uninformed consumers that want a bargain and soon every carrier in the market has to follow suit to retain market share. As I said though, all meaningless bullshit.
posted by ClanvidHorse at 2:25 PM on January 11, 2011

How long does the credit last in other countries? Vodafone Flexicap credits only last 30 days. If you don't spend everything in 30 days, it disappears. If you overestimated how much you needed, that's money in the bank for Vodafone.

365 day recharges are priced at one-to-one.
posted by zamboni at 2:25 PM on January 11, 2011

It's also so they can charge you more for usage above your cap.

If you pay $29 for $150 credit, and they charge you (say) 50c per text, the "real" cost of a text is around 10c. But the moment you go above your cap, you pay the full 50c per text. It can add up very quickly.
posted by Xany at 2:49 PM on January 11, 2011

It's just marketing crap. You do, in fact, get a set amount of minutes and data.
posted by His thoughts were red thoughts at 2:57 PM on January 11, 2011

Your confusion is that you're thinking that the amounts listed are real dollars and money. What's happening is that we're getting a peek behind the veil, which is that money is only worth as much as we all collectively agree it is worth, it is mostly arbitrary.

it's what happens when economies are allowed to be run by marketers.
posted by wilful at 3:04 PM on January 11, 2011

Xany, when we hit our $150 limit on the pre-paid Vodafone plan, we simply can't ring or text from the phone anymore (except for emergency calls apparently - thankfully I haven't had to find out for sure). Once you've run out of credit on pre-paid, you've run out, and can't use it again until you recharge/topup with cash.
posted by malibustacey9999 at 3:06 PM on January 11, 2011 [1 favorite]

It's a f*cking scam, and I wish the ACCC would shut it down already and make everybody sell minutes. Woolworths can't say "look, bananas, 99c/kg - A $149 VALUE, SAVE $148!"
posted by obiwanwasabi at 3:18 PM on January 11, 2011 [5 favorites]

australian telco pricing is made out of lies, there's no incentive for any of them to not do it, and the ACCC doesn't do anything about it... that "$150" isn't denominated in the AUD you might expect, but rather in magical Vodafone Dollars that bear no relation to anything other than the other numbers on your bill (if that)...
posted by russm at 6:49 PM on January 11, 2011

Yes, it's horrible. Also, the prices of minutes change with the amount of money you put on. And any remaining money, when you put on more money, changes value (in cost / min) based on the new value. Don't get me started on prepaid wireless internet.

You should see the spreadsheet I had to put together to figure out the best deal when I got a new plan.

tl;dr: Fucking marketing.
posted by defcom1 at 7:06 PM on January 11, 2011

You should see the spreadsheet I had to put together to figure out the best deal when I got a new plan.

wait a minute - you're not meant to be able to do that!
posted by russm at 7:17 PM on January 11, 2011 [1 favorite]

Xany, when we hit our $150 limit on the pre-paid Vodafone plan, we simply can't ring or text from the phone anymore (except for emergency calls apparently - thankfully I haven't had to find out for sure). Once you've run out of credit on pre-paid, you've run out, and can't use it again until you recharge/topup with cash.

This is done in order to maintain comparability between their products - if they structure their monthly cap-plans that way in order price gouge consumers, they must also structure pre-paid plans that way so there's an apples-to-apples comparison between them - even though there's no opportunity for price gouging there.
posted by xdvesper at 9:34 PM on January 11, 2011