Economics of interest free mobile deals

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mdf

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#261294 20-Nov-2019 09:02

Of late, I've noticed quite a few mobile deals/sweeteners that are only available if you buy the phone on an interest free plan. e.g.

- Spark Note 10+ with a free Segway e-scooter (this offer certainly turned my head when I saw it)

- Vodafone & 2degrees Note 10+ with $200 discount and Galaxy buds

Just trying to figure out why these deals are interest-free only and not available if you buy the phone outright?

Given the phone is interest free, I don't think you're paying for these yourself via the interest payments.

I know Samsung has offered pretty good sweeteners previously (e.g. buy one s10 and get another free), but I doubt Samsung has any incentive to discourage buying upfront.

Is it just the phone providers trying to lock you in to a contract without actually having a minimum term plan? Why is this better for them than (say) just having a minimum term plan?

coffeebaron

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#2357644 20-Nov-2019 09:06

The interest free deals means you are more likely to stay with provider for the duration of the interest free payments. So it's kind of like a term contract without being a term contract.

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mdf

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#2358194 20-Nov-2019 20:34

Ta. I'm still not sure I understand the rationale between offering it as an interest free tie in rather than just "sign up for a 2 year plan and get a free X"? That seems to be what happens in the fixed line space.

Geese

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#2358401 21-Nov-2019 08:53

A bit o/t but rather than ask in other thread,

That spark deal it says "If you leave or downgrade your plan within 6 months, an exit fee of $500 applies. If you leave or downgrade your plan within 7-12 months, an exit fee of $300 applies."

Does anyone know what applies beyond 12 months?

Deezdeehan

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#2358537 21-Nov-2019 11:51

Yep, if you leave/cancel the mobile plan before the end of the fixed term instalments (12/18/24/36 monthly) then and past the 'exit fees' timeframe under T&C's for the scooter than you're just paying off the device instalments remaining. No ETF or additional catches.