Perhaps you are in the market for a new cell phone for you or a loved one this holiday season. With all sorts of cutting edge gadgets on the market and just as many different phone plans, it can be hard to cut through the noise and find the deal that works for you. Not helping clear the confusion is an industry bent on making money by charging you for things you may not need.
Bill Menezes, a principal research analyst with Gartner Research, helped us break down three key areas where you can save money as you search for the perfect phone and the perfect plan.
1 - Don’t buy too much data
Gone are the days (in most cases) of plans that include unlimited data. In their place wireless companies offer tiered plans that give consumers anywhere from one to ten gigabytes of data for a flat fee. Go over your allotment and you pay an extra fee.
There’s one problem for the consumer Menezes says, “people who are buying those frequently are only using a fraction of [what the pay for].” According to the carriers, only about 5% of their users are using as much as three gigabytes of data or more.
2 - Subsidies
For the better part of fifteen years subsidies have been cell phone companies’ bread and butter. You see a shiny new phone with a list price of $500. The carrier will offer the give you that phone at a deep discount, say $99, if you promise to be their customer for two years. Over that two year period you aren’t just paying for your service plan, but hidden in those charges is the rest of the cost of that shiny new phone.
“What [carriers] won’t do is separate that data plan from the cost of the phone so even if you pay full price for the phone up front -- they don’t reduce the price of the service plan accordingly,” Menezes points out.
Instead, he says, “look at other alternatives where the price of the phone is considered separately from the cost of the service plan,” noting that T-Mobile (TMUS) has gone the furthest in offering such plans.
3 - Contracts
Closely tied to both data and subsidies are the contracts themselves. They can be full of legalese and difficult to make sense of, Menezes says. So before you even start looking at phone and plans, think about your own usage.
Menezes suggests consumers look back at several past bills. How many voice minutes do you use per month? How much data do you consume? Are you a serial texter or are emoticons and abbreviations like “lol” a foreign language to you. “Most American consumers tend to look at ‘can I afford the monthly payment,’” Menezes says, “what you need to look at is what will this cost over one to two years.”
Lastly he notes that pre-paid plans, once reserved for those with bad credit, are no longer lower in quality. Some, he says, are structured and priced very competitively with respect to their more traditional counterparts.