In alt.cellular.verizon Joel Koltner <zapwireDASHgroups@yahoo.com> wrote:
>
> The pay-as-you-go phones tend to make significantly more money on a "per
> minute of usage" basis than "regular" (contract) phones, so the marketing idea
> there is that it doesn't take nearly as long for the manufacturer to re-coop
> the "discount" they gave you on the phone, so even if you lose or throw away
> or otherwise stop using the phone (and go get another one for $50) there's a
> decent chance they'll have already made some money off of you overall.
>

And what I have been saying is they don't really discount those prepaid phones
at all ... or very rarely. Most are phones that were high volume sellers and
became excess inventory, so they sell those as prepaid [or offer them as
"free" to subsidized customers]. Clearing excess inventory that they would
otherwise write off because they need room for newer more profitable models
makes a lot of sense ... and thus, the prepaid companies tend to be
subsideries or completely different companies altogether that got to buy these
phones on clearance. I bet buying one of those $30 prepaid phones provided
a net revenue of $15 for the carrier offering the pre-paid phone, even if it
is never activated ... because the phone is not worth $30 to them, but, in teh
case of my example, only $15.

BTW ... it is such inventory price depreciation that they write off, not the
subsidies ... just referencing another part of the thread.

They didn't lose money on that Sanyo phone the sold this guy because the phone
isn't worth to them as much as he paid for it in the first place [hence they
made a profit]. That is why the cheap comittment free pre-paid phones are
older models [or some current models where inventory is well in excess of what
it should be], the phone is now worth less to them, so they sell them for
less. The goal is to not have to write off any losses at all and that is what
these phones do for the carriers; they take a loss due to depreciation not due
to some pre-paid guy buying the phone and using it on another carrier ... the
goal was to get rid of the phone, not whether it was activated or not.

To the guy who bought the Samsung at Walmart ... did you ever price that phone
to what is available on Ebay as new for the same model? I bet the price was
similar or even higher at Walmart.

--
Thomas T. Veldhouse

America is the country where you buy a lifetime
supply of aspirin for one dollar, and use it up in two weeks.