Mobile phone deals have been slowly evolving over the past couple of years, there was a time when a consumer would never have been entitled to a ‘free’ handset and yet today mobile phone retailers and networks are throwing cash back and free gifts at potential new customers.
To understand why the dealers are adding more and more free gifts and higher cash back amounts we need to look at how the industry actually works behind the scenes, the part that the average man on the street would not know of when walking into a mobile phone shop.
The overriding power behind the industry itself is the mobile phone networks, these are the companies that connect the handset to their network and provide the billing solution as well as the customer support. When a customer connects directly to the network either via their online shop or in their high street store, there is no middle man involved, that is to say that there is no independent retailer or dealer involved, you will only be able to buy handsets on that network and subscribe to the tariffs of that network.
Independent retailers work differently, they are actually paid a commission by the network that they connect a new handset to, the amount depends heavily on the tariff the consumer is subscribing to, as an example the lower value monthly tariffs of say £20 do not offer as much commission as the larger tariffs of £75 or above. There is also another recent factor brought into play as more and more retailers and dealers try to push consumers onto 18 month contracts rather than the standard 12 month, again there is far more commission available for the longer contract term.
Each month the retailer will receive a commission forecast for the month ahead, they can see exactly how much money they can make when connecting their handsets to the individual tariffs, notice that we said their handsets? The majority of independent dealers buy handsets themselves for connection to the networks, this usually lowers their costs and ups their profit margins as they can negotiate lower prices for volumes of handsets.
Now the retailer has to work out how much commission they have to play with, they look at their overall commission payment for each tariff and subtract the cost of the handset, this leaves them with their profit margin, however it is not as simple as that anymore as competition in the mobile phones market is rife.
Dealers are now using the extra commission payments that they get for the larger tariffs to buy what they class as ‘free’ gifts, the more popular on offer include the Playstation 3, Xbox
But beware, before signing a contract fro these deals it is important that the retailers terms and conditions are read, no more so than this time of year with the run up to Christmas. Many retailers will not send out the free gift
This is mainly because of handset returns, consumers have 14 days to change their mind and return the handset thus terminating the contract agreement, had the retailer sent out the free gift at point of sale they may not be able to get it returned or in a new state with the packaging.
Consumers need to be aware of this especially if they are planning to give the free gift as a present to somebody else for Christmas, it seems a great deal, the customer gets a new, free handset and saves themselves lots of money on expensive gaming consoles but if the product is on a 28 day delivery and they have ordered too close to Christmas it may not make it on time.
The Free Nintendo Wii is just one of many Free gifts with mobile phones.
Should you require any further information please feel free to visit our mobile phones shop.
Tags: free nintendo wii, nintendo wii
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