2/22/2009 www.mountainviewcellphones.com
There are many people who fear “contracts.” It’s silly. The carrier gives you money and you as the consumer don’t take it. Sorry…on this consumers are just dumb.
Here are the reasons why this argument about not signing a contract doesn’t hold up.
1. You can get out of the contract anytime if you pay $200. Namely, give back the money the carrier gave you upfront for the hardware discount.
2. You get the money again in 2 years (in some instances every year).
3. You can sell your phone. Yes, this hardware has a market value.
4. If you just want a 1 year contract, go buy the equipment “used” or “new” on the open market and then just activate it with any carrier you want.
But consumers want everything, convenience, cheap phones, cheap plans, full 100% service, and no contract commitments. This give away is financially impossible for any carrier.
If your a commitment “phobic”, you just have to ask yourself one question. Will you be using a cell phone 2 years from now? If the answer is “yes,” sign the contract with the carrier of choice.
Every carrier provides 30 days to return the phone and not have any contract obligation. Sure there is some trouble involved by the consumer to get this done (making a 20 minute phone call to the cancellation department), but it shouldn’t even be a consideration as you get the money for the contract upfront and the carrier doesn’t make the money back for 6 months. This is 6 months of value transfer from the carrier to the consumer.
With the major carriers, you are paying for customer service, coverage, phone innovation, phone services, solution determination, AND some flexibility. Sure you can sign up with MetroPCS, but when you need help, do they have a service and repair center nearby to help like Sprint?
As the phone hardware you purchase can be resold this provides another reason to sign the contract. Namely, if you buy a smartphone, you are generally getting a lot more money off the phone than the $200 termination fee. So if you resold it within 1.0 years, you can recover the $200 if you keep the phone in good condition. Most other phones, you can get at least $100-$200 for mid line phones. So, you can get your money back for most phones. If you get the free phone, you won’t recover the value back in the secondary market.
In summary,
1. The $200+ you get up front, you can make it up (some or all) on the back end thru equipment sales.
2. You get the money again in 2 years for another 2 year contract to get new equipment.
3. If you’re going to use a cell phone anyway, why not get a better phone to use and pay less.
4. You are just giving the money back the carrier gave you upfront. So, in reality, you are ahead for the period of time you took the money before you give it back.