On-contract device pricing

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I Plan to Stick Around
Posts: 8

On-contract device pricing

I was not certain exactly what sub forum to post to so i will place it where it will get some views. If this has already been discussed well lets bring it to the surface once again.

 

Looking at the Samsung Note 7 price (although this applies to all devices) i see $559.99 with a savings of $490.01 for contract discount.

 

Here is what I know, if I purchase the device on-contract with this pricing in mind, $559.99 will be paid up front with $10 added to my bill for the life of the contract 10 x 24mths = $240. The discount gets reduced to $250.01.

 

Why is this not stated anywhere on the purchase price listing? Why is there not even a disclaimer (in fine print)?

 

Should this so-called "Tab" charge be removed with the carriers gaining more from charging the customer higher monthly fees (since the reduction of contract periods)?

 

Is the the customer getting jerked around with this pricing model?

 

***Edited Labels***

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I Plan to Stick Around
Posts: 16

Re: On-contract device pricing

All the major carriers implemented policies like "tabs" after the CRTC implemented their new rules, particularly around cancellation fees. Today, if you get a subsidized device, you can cancel your contract at any time (even prior to the 2 years being up) by paying off the amount remaining on your FlexTab (which is the subsidized amount, amortized over the 2 years).

 

I agree the impact of the Tabs is not well understood by most people. If you get a subsidized device (that's a newer phone) and thus sign up with the latest plan, you are forced to go on the Premium tab (today, there's also a Premium+ tab as well depending on the phone you get).  This costs $10-$20/month more than if you bought the device outright (BYOD). Over a 2 year contract, this is $240 - $480 more in monthly fees. Most of the time, the subsidy of the device is ~$500. So really, you're only getting a "discount" of ~$20 (assuming you pay $20/month more) and Rogers is effectively giving you an interest free loan for the bulk of the subsidy amount. This is how it was when the iPhone 6 and 6S came out - the subsidy was around $490, but the Premium Tab (which you had to be on with those phones) cost $20/month more than BYOD pricing.

 

I think the reason people aren't aware of this, is that prior to the introduction of the new CRTC rules and "Tabs", the subsidy used to be a REAL discount. You would get ~$500 off the price of your phone, and in return, you would be locked into your contract for 3 years. So people think this is still the case. But because of the new CRTC rules where you can cancel at any time and pay off the remainder of the FlexTab (which must be amortized over the life of the contract), carriers don't want to give you straight discounts on the phone any more - instead they make you effectively pay for the amortization of the FlexTab by your increased monthly payment.

 

There have been some discussions on here in the past about this. Given the actual discount is now really small, if you can afford the cash liquidity hit of buying your phone outright (ie. an iPhone directly from Apple), it really doesn't make sense to get a subsidized phone any more. This is even more true if you have a great plan, since buying a subsidized phone means you have to go onto the latest plans. Buy the phone outright (and it's unlocked as a bonus), get BYOD pricing, and keep your old plan.

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Moderator
Moderator
Posts: 1,845

Re: On-contract device pricing

 

Hello, @zerothree

 

Welcome to the Rogers Community Forums! Smiley Happy

 

Thank you for posting your query in the Community. In your example of Note 7, the offer of $559.99 up front is on a 2-year Share Everything Plan and there will be no change in the price of the plan. Please follow the link to know more about our Share Everything Plans.

 

Cheers,

RogersMoin

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I Plan to Stick Around
Posts: 16

Re: On-contract device pricing

All the major carriers implemented policies like "tabs" after the CRTC implemented their new rules, particularly around cancellation fees. Today, if you get a subsidized device, you can cancel your contract at any time (even prior to the 2 years being up) by paying off the amount remaining on your FlexTab (which is the subsidized amount, amortized over the 2 years).

 

I agree the impact of the Tabs is not well understood by most people. If you get a subsidized device (that's a newer phone) and thus sign up with the latest plan, you are forced to go on the Premium tab (today, there's also a Premium+ tab as well depending on the phone you get).  This costs $10-$20/month more than if you bought the device outright (BYOD). Over a 2 year contract, this is $240 - $480 more in monthly fees. Most of the time, the subsidy of the device is ~$500. So really, you're only getting a "discount" of ~$20 (assuming you pay $20/month more) and Rogers is effectively giving you an interest free loan for the bulk of the subsidy amount. This is how it was when the iPhone 6 and 6S came out - the subsidy was around $490, but the Premium Tab (which you had to be on with those phones) cost $20/month more than BYOD pricing.

 

I think the reason people aren't aware of this, is that prior to the introduction of the new CRTC rules and "Tabs", the subsidy used to be a REAL discount. You would get ~$500 off the price of your phone, and in return, you would be locked into your contract for 3 years. So people think this is still the case. But because of the new CRTC rules where you can cancel at any time and pay off the remainder of the FlexTab (which must be amortized over the life of the contract), carriers don't want to give you straight discounts on the phone any more - instead they make you effectively pay for the amortization of the FlexTab by your increased monthly payment.

 

There have been some discussions on here in the past about this. Given the actual discount is now really small, if you can afford the cash liquidity hit of buying your phone outright (ie. an iPhone directly from Apple), it really doesn't make sense to get a subsidized phone any more. This is even more true if you have a great plan, since buying a subsidized phone means you have to go onto the latest plans. Buy the phone outright (and it's unlocked as a bonus), get BYOD pricing, and keep your old plan.

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I Plan to Stick Around
Posts: 8

Re: On-contract device pricing

Thank you for you clear and concise response and for reassuring me that I'm not losing my mind 🙂
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I've Been Here Awhile
Posts: 3

Re: On-contract device pricing

This was a really helpful response, thanks Christopher. I have a related question.

In October 2014 I bought the new iPhone 6 Plus with a two year plan, subsidized by Rogers. As I understand it, every month I pay $20.16 as part of my FLEXtab, and it says that come October 5th my FLEXtab will be reduced to $0.

My current monthly bill is $110. Shouldn't this mean that after October first my monthly bill goes down to $90?

I tried asking Rogers chat about this, but "April from Price Edward Island" was clearly ESL and it was very difficult to understand her explanation along with all the misspellings and poor grammar.
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I'm a Trusted Advisor
Posts: 32,078

Re: On-contract device pricing

Hello @tg83

No it does not mean that. You paid half of the device price when u did the upgrade on Oct 2014. The rest of the device price was left on a Flextab which comes down each month $20.16. So each month that flextab balance will decrease to become $0 on Oct 2016. This has nothing to do with ur plan or billing.
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I've Been Here Awhile
Posts: 3

Re: On-contract device pricing

Thanks for the quick reply. I thought that the FLEXtab was part of the monthly amount that I'm paying, so once the FLEXtab runs out then my monthly bill should go down accordingly.

In October, if I wanted to upgrade to a new phone, I'm guessing I'll have to pay an unlock fee but once I do that my current phone is mine to do with as I please, yes? And then if I want a new phone, I repeat the process I started in October 2014, yes?
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I'm a Trusted Advisor
Posts: 32,078

Re: On-contract device pricing

Hello @tg83

Once the upgrade fee aka flextab is at $0 then you can upgrade to a new device and just pay the device price on sub pricing. You do not have to pay a upgrade fee. So u do exactly what u did in Oct 2014.

You can pay the $50 unlocking fee now if u like and either sell it or do whatever you please with it. You can unlock the Rogers branded device after 90 days of doing the upgrade on ur account.
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I've Been Here Awhile
Posts: 3

Re: On-contract device pricing

Perfect, thanks for all the helpful information and quick replies.
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I'm a Trusted Advisor
Posts: 32,078

Re: On-contract device pricing

Hello @tg83

You are welcome!:)