I continue to have concerns about how VZW stores apply the Masschusetts DOR Directive 11-2. They continue to routinely charge customers state sales tax on the RETAIL price of the cell phones purchased in bundled transactions. A web search of forums, discussions, blogs, and newspaper articles reveals that the problem is fairly widespread. Per Directive 11-2, the customer should be charged based on the WHOLESALE cost of the phone. See the examples in the Directive 11-2 link. I find it disappointing that VZW is not able to get this right, over three years after the Directive was issued.
Subsidy is not whole sale price. Also unlike popular belief carriers don't get a whole sale discount.
Thanks for your input. I understand that subsidized price and wholesale might be different. And directive 11-2 accounts for this possibility. What I cannot resolve is that the stores say they have no margin on the phones at all. I find it very VERY hard to believe that any brick and mortar store would ever handle a product with zero margin. The cost to the retail consumer cannot be the same as their own cost. That's not how businesses survive. It just doesn't add up to me.
Here's the thing the law doesn't take into account and it will be revised. Subsidies you end up paying full retail not any price consumers assume.
They make money off the contracts not the devices. Like I said earlier they do not get some wholesale price like popular belief. You may find it hard to believe like a lot of people out there, but you can try and contact a manufacturer and tell them you want to buy 10M units and make sure you have your business license. You will find out you'll pay the same per unit even if it's 10K or 10M.
FYI it's a similar model that console companies use. They don't make money off consoles. They make money off the games. Sony(Verizon) loses money per unit for companies like GameStop to make money(franchise Verizon stores) in the tune of $50 last I read. Sony makes $15 per game, and bluray sold. Verizon loses initially any subsidy given out then slowly recoups and makes profit.
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