If T-Mobile’s $0 down strategy is so smart, why didn’t it start there?
If T-Mobile offering half off the up front price of its most popular smartphones wasn’t the answer, then offering $0 up front must surely be. That’s the logic which T-Mobile is using with its new pricing scheme which sees it offering phones for full price but on scheduled credit, with the cost of the phone spread out over two years worth of surcharges on the monthly service plan bills. But if this is such a smart move, why not start with it? Why waste months offering a mere half off up front? Logic says that if it didn’t work before, it won’t attract a rush of customers now. But T-Mobile may be onto something here.
Customers tend to focus on the price tag of a smartphone, typically $199 for the most popular models when attached to a two year contract, while paying less attention to the two years worth of $80 to $100 payments they’re signing up for in the process. Several of them buy a cheap $0 smartphone with less functionality without considering that they’re paying a couple thousand dollars over twenty-four months and getting less out of it just so they can save the $199. T-Mobile is extending that logic further by making the up from cost zero on even the best smartphones, causing their price to fully disappear into the monthly payments. Despite being broken logic, it just may allow some consumers to fool themselves into believing they’re getting the top phone on the market for free even when they know better.
Buying smartphones on a subsidized contract has rarely involved logic. Consumers pay $199 for a phone that would cost them $699 without the contract even though the phone isn’t worth anything close to the latter amount, with no way to know what they’re really paying for it. The T-Mobile $0 down plan simply takes that total lack of logic to its logical conclusion.
From www.stableytimes.com