Re: Does Verizon even care about customer loyalty anymore?
Weth
Legend

I have been a cellular user for 26 years.  The cost was always baked into the total cost of service giving one a false sense of getting something when they did not.  It has always been smoke and mirrors. 

Your research is wrong on profit margin for phones.  Apple, which has the best profit margin by far, has 40% margin.  Resellers like Verizon make very little on reselling smartphones. 

Go with what makes most sense to you, that is the beauty of competition.  Verizon will be forced to change if enough people leave. 

My my advice was sound, keep costs lower by not getting a new phone every 2 years.   That advice works on any carrier. 

Re: Does Verizon even care about customer loyalty anymore?
immto
Enthusiast - Level 3

Well I've been a user for about 20 years and I know the price has always been worked into the cost of the service, but the carriers have never been so bold as to charge you more, if you commit to a contract.  Back in the day, you got your free or deeply discounted phone in exchange for a committed term.  If I dropped the cash to buy a phone, the phone belonged to me and I could take the service and leave it whenever I wanted, with no penalty.  Now it's totally different, they want you to pay full price for the phone, AND, they want to charge you MORE, if you dare commit to a contract, and take the little discount they pretend to give you. 

I would like to see where you are getting your 40% profit margin information.  I've seen reports for Bill of Materials from isuppli, which show the costs of phones like the Galaxy S series costing in the low $200's.  And Samsung also makes many of it's parts, so the cost is mostly internal.  Those figures are a little outdated and Samsung has done much in the way of improvement and automation in the last few years, so those costs could actually be even lower today.  Iphones have a much larger portion of the market share, I would find it very hard to believe that an iphone is costing more than $200 to build.    

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Re: Does Verizon even care about customer loyalty anymore?
Weth
Legend

Bill of materials and final cost is not the true profit margin. You must pay people to put it together, you must pay to ship the phone, you must pay to store the phone in warhouses so you have enough supply on day 1, you must pay to design and test the phone....

Here is one of many examples from reliable sources about the true profit margins around 40%

@Analysts worrying about Apple's future profitability and gross margins - Business Insider

If you pay full price for the phone, you are not charged more. The price you pay on contract is not the full price, but a highly subsidized price that you end up paying back with higher fees.

I don't see where you are going to go to that doesn't do something similar. ATT, the same. Tmobile - no longer does any subsidized contracts, so all phones are full price on payment plan or full out. Good luck to you, but your current understandings are just a bit off.

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Re: Does Verizon even care about customer loyalty anymore?
mama23dogs
Legend

immto wrote:

Do you know what the profit margins are? Because I've done some actual research on this and found that profit margins on high end smart phones in some cases is over 200% compare this to Porsche who sells high end cars, their profit margin is 20%. I think the only reason companies like Samsung, Apple and LG are able to keep this up is because we have been too stupid. We have not yet started demanding answers to the question, how much does this phone actually cost? And now the carriers have determined that so many people wlll line up to pay out the nose for a "new phone", that they can start charging us full price and we won't bat an eye, they roll it into some fancy sounding payment plan and make it seem like it's a good deal, when it's really not.

The profit margins are dropping BECAUSE we are being asked to pay for our phones at full price.   The carrier profit is about 20%,  that is way down from typical retail which was double the wholesale price from just 3 years ago.  That is if the phones sell at full price.  And phones are preordered in bulk.

The sales figure for phones have dropped.  ATT sold 500,000 fewer phone during first quarter of 2016 when the stopped offering contracts.  Sales have not picked up. 

Apple help the trade in sale on the debut of the iphone 7 because it was afraid the phone would flop.  Had they know the Note 7 would go down in flames, they might have been more confident.

The market for unlocked, used phones and low cost phones is booming.  Best thing the market did was drop contract sales.  Forcing competition in a market that really has had none in 20 years.

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Re: Does Verizon even care about customer loyalty anymore?
immto
Enthusiast - Level 3

Dude that shows the companies profit, not the margin on a single iphone.  Anyone who understands business, knows that a company as large as Apple, has a lot of moving parts, and most of us have known for a while that Apple in particular has been subsidizing their overall operation with the profits off their single profitable item, the iphone.  That does not mean their profit margin on an iphone is 41%, it means that overall they made 41%, that includes all the other computers they lost money on.

Just because all the other carriers are screwing us over, doesn't make it right.    

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Re: Does Verizon even care about customer loyalty anymore?
mama23dogs
Legend

immto wrote:

Well I've been a user for about 20 years and I know the price has always been worked into the cost of the service, but the carriers have never been so bold as to charge you more, if you commit to a contract. Back in the day, you got your free or deeply discounted phone in exchange for a committed term. If I dropped the cash to buy a phone, the phone belonged to me and I could take the service and leave it whenever I wanted, with no penalty. Now it's totally different, they want you to pay full price for the phone, AND, they want to charge you MORE, if you dare commit to a contract, and take the little discount they pretend to give you.

Don't know what plan your on, but that is not the case.  Your plan and service are now separate.  You pay a fair market price for each. 

If you still have and choose a contract option, the price of the phone will be built into your monthly fee.  what you did NOT get back in the day, is a discount on the line fee if you did buy a phone outright.  That was The ripoff, not the current plans.

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Re: Does Verizon even care about customer loyalty anymore?
Weth
Legend

Those are specific margins for the iPhone. Overall Apple gross margins are seen here:

Apple Gross Profit Margin (Quarterly) (AAPL)

They are lower than on the iPhones. Profit margins on iPads and computers is less than they get on the iPhone.

I don't understand what you want. Companies are in it for profit, even to maximize profit. You are in it to minimize costs. Either you buy or you don't and the company would need to adjust to the market. There are many other cheaper options out there if that is your only measure.


It is better now since it is no longer hidden in a fee. I have 6 lines and with 32 GB of data and average $33 per line. I am satisfied and feel I am getting a decent deal. Sure I think data is still overpriced, but it is better than it was even a few years ago.

Re: Does Verizon even care about customer loyalty anymore?
immto
Enthusiast - Level 3

It's arguable if we're really getting a "fair market price" on the phone, but that's not the point I was making.  Back in the day they did not give a line fee discount, you're correct, BUT, the line fee stayed the same, whether you paid for your phone or took the discount.  Now they are giving you a line fee discount if you pay for the phone, or if you take a payment plan, BUT, not, if you take a discount on the phone.  So in other words, they are NOT giving us a benefit for staying a loyal customer. 

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Re: Does Verizon even care about customer loyalty anymore?
Weth
Legend

I just got 8 GB monthly for free for being a "loyal" customer. By loyal, I assume you mean you pay your bills. Before you were paying for the phone even after it was paid off on the contract. That wasn't fair. Not it is more transparent and fair. When the phone is paid off on the contract, your costs go down. You keep thinking you were actually getting a phone for 99 cents and you never were. It was all smoke and mirrors marketing ploy. Then after 2 years if you did not get a new phone, you still kept paying a higher fee for that line than it otherwise would have been.

There is no reason to do a contract today. Usually the best deal is the payment plan. Times change, things change, adjust. Back in the day I paid $50 a month for 100 minutes, no text messages, no data. Things are better now.

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Re: Does Verizon even care about customer loyalty anymore?
immto
Enthusiast - Level 3

No, I was not paying for the phone even after it was paid off, because the fee was paid for up front, and then it was done, the costs, as we already discussed were built into their contract pricing, or cost of doing business.  The overall costs of having a mobile phone have not really come down, in fact they have steadily gone up, so it's not like the carriers are really giving us anything.  I can remember 10 years ago I was paying for 4 lines and my bill never went over $200.  Today I'm paying over $200 for 3 lines.  Yes, it's better service, and yes the phones are better, but also as we discussed, technology is always improving and as such, it should be getting less expensive over time.  Somehow, people like you are under the impression that this progression should not flow down to those of us who pay for the service, our service should always get more expensive and we should always get less in return, according to your philosophy.  I'm starting to wonder if you're not a paid troll who just defends Verizon all day.