Here's a little bit of economics I'm not sure I've quite got my head round. I have a feeling that my whizzy new mobile phone (see the last couple of posts for details) has just become more expensive, even though the price has not changed.
I was previously paying about £25 per month for my mobile phone contract on my old phone (that actually includes 2 phones, as my partner's phone is on the same account). The new phones needed me to sign up to paying about £45 per month (again for 2 phones) for 2 years. I figured out that the phones were therefore costing £20 a month for 2 years, that being the marginal cost of the new contract compared with my old one. That works out at £480 over the in total, meaning that each phone costs £240. Given that you pay about £300 to buy one of the phones outright, that seemed like a good deal, especially as I've ignored discounting in the above calculations, which so the discounted cost of the phone is really less than £240.
Now, since I no longer need my old phone, but I figured it might be useful as a backup or circumstances when I don't want to be carrying an expensive piece of kit with me (such as when I'm out running), I thought I'd keep it active but switch it to a pay-as-you-go account. However, when I phoned my old network to ask them to make that change, they offerred instead to put me on a much cheaper contract, at £5 per month per phone, or £10 a month for both (I've accepted this, even though I doubt that I'd have spent that much on pay-as-you-go services, simply for the convenience of sticking with monthly billing).
So here's the thing. I was paying far more than I needed to for my old phone. I could have just phoned them and asked them to reduce my monthly bill even if I hadn't bought the new phone. I thought that that marginal cost of the 2 new phones was £20 per month, but it now turns out that it's really £35 per month.
I'm not sure I'd have bought the new phones if I thought they were costing me that much. It feels like the price has gone up. However, I'm still paying exactly the same amount for the new phones as I'd previously agreed to pay.
Is my phone now more expensive?
Here's a little bit of economics I'm not sure I've quite got my head round. I have a feeling that my whizzy new mobile phone (see the last couple of posts for details) has just become more expensive, even though the price has not changed.
I was previously paying about £25 per month for my mobile phone contract on my old phone (that actually includes 2 phones, as my partner's phone is on the same account). The new phones needed me to sign up to paying about £45 per month (again for 2 phones) for 2 years. I figured out that the phones were therefore costing £20 a month for 2 years, that being the marginal cost of the new contract compared with my old one. That works out at £480 over the in total, meaning that each phone costs £240. Given that you pay about £300 to buy one of the phones outright, that seemed like a good deal, especially as I've ignored discounting in the above calculations, which so the discounted cost of the phone is really less than £240.
Now, since I no longer need my old phone, but I figured it might be useful as a backup or circumstances when I don't want to be carrying an expensive piece of kit with me (such as when I'm out running), I thought I'd keep it active but switch it to a pay-as-you-go account. However, when I phoned my old network to ask them to make that change, they offerred instead to put me on a much cheaper contract, at £5 per month per phone, or £10 a month for both (I've accepted this, even though I doubt that I'd have spent that much on pay-as-you-go services, simply for the convenience of sticking with monthly billing).
So here's the thing. I was paying far more than I needed to for my old phone. I could have just phoned them and asked them to reduce my monthly bill even if I hadn't bought the new phone. I thought that that marginal cost of the 2 new phones was £20 per month, but it now turns out that it's really £35 per month.
I'm not sure I'd have bought the new phones if I thought they were costing me that much. It feels like the price has gone up. However, I'm still paying exactly the same amount for the new phones as I'd previously agreed to pay.
I'm struggling to get my head round this.