Thursday, 4 April 2013

Save money when you upgrade your mobile plan

The contract for my phone plan is about to expire and I was thinking about upgrading my phone and changing my plan.  Now before you jump in and tell me that this goes completely contrary to my desire to control my expenditure better after my disastrous start to 2013 I think that it is possible, in the right circumstances to get a brand new phone, a better deal AND pay less money if you do your research.

Please note that this is written for Australian mobile phone users only.  Whilst the principles are true for wherever you are, the specific examples are from April 2013.  Better deals may come along and if you see them please post them below.

How to save money on your mobile phone plan:

To work out how you can save money on your phone plan you need to answer two important questions and think about the amount you use your phone.  These include:

  1. Are you currently with one of the big carriers and do you need to be?
  2. What is your actual usage each month on average and what are your extreme usage months?

Are you with one of the big carriers and do you need to be?

You can save a lot of money by switching from one of the big carriers (Telstra, Optus, Vodafone) to a smaller reseller who offer great deals.  However this is not a great idea if you need to be with one of these providers.  Reasons you may need to be with these providers include:

  • You require coverage in remote areas
  • The bundling of your mobile phone allows you to get really good international rates or cheap internet (note that many of the smaller resellers also offer very cheap internet)
  • Your whole family, friends and partner are all on the same network which offers free calls between people on similar networks
If you are like me, however and live in a major city and only very occasionally go into low coverage areas and have existing bundles with great rates and your friends are on all different networks then basically there is no reason to stay on these carriers.

The smaller carriers, I have looked into TPG and Kogan which as of writing seem to offer the best deals, are resellers for the major networks.  TPG resells for Optus and Kogan for Telstra (though does not have the same level of coverage and has no access to their 4G network).  

These smaller carriers tend to offer sim deals only.  That means you need to buy your phone outright (unlocked) and then insert their sim.  They do not offer phone bundles.  What this means, however, is that it is harder to compare apples with apples as most major carriers bundle the phones and the phone plans.  If you do a little bit of work you can save a lot of money.

What is your actual usage each month and what are your outlying usage statistics?

It is important to know how much you actually use each month.  There is the possibility that you could save money simply by going to a cheaper plan which more matches with your usage patterns.  The plan I am currently on actually suits me perfectly so I am looking for a similar plan.  

Note that this includes calls, texts AND, importantly in the age of smartphones, data.  I am currently on Vodafone's $49 cap plan which has $500 of included talk and text and 1.5 GB of data.  I use about 70 - 80% of my talk and text every month and 70% of my data.  In more extreme months I cut it a bit more fine but I have only once busted through my cap so this is a great plan for me.

It is important to know what your usage is because it is always tempting to sign up to 'unlimited' plans or ones with a huge amount of included value for 'a little bit more' but you never end up using that extra amount of value.

How do you actually save money when your phone contract expires - a worked example

As I mentioned above I'm on Vodafone's $49 cap and as much grief as that carrier seems to get (and trust me a few years ago it was valid), currently their service is fine and works brilliantly however I think I can get a lot of value by buying my phone outright and switching to a smaller carrier.

So what are my requirements?
  • A new android based phone (I love android - as readers of my Nexus7 review would know)
  • To spend less than I currently do ($49 per month)
Which carrier?

With my usage pattern described above I have decided to go for TPG's mobile medium plan.  It has exactly the same call rates as my current Vodafone plan (but does not come with the phone)
  • Costs $17.99 per month
  • First month set up costs of $40
  • Has $550 of included value (an extra $50 per month I didn't have with Vodafone)
  • 1.5 GB of data (same as Vodafone and what I needed)
Note that if you're a really heavy user of phones, calls and texts Kogan has a plan which you pay upfront for a year and you get unlimited calls, unlimited texts and 6GB of data per month!  This costs $25 per month but I really didn't need it.

Which phone

I love my current phone (the original Samsung Galaxy S) however I think I'm going to switch over to Google's Nexus 4.  It has everything I need, has all the latest technology and gadgets and Google is subsidising it so it only costs A$399 from the Google Play store.  

Note that carriers in Australia do not sell or bundle this phone and I have no idea why.  It gets great reviews and it is amazingly cheap for what it is.  Over 24 months you are paying $16.63 per month effectively for the phone.

What is the total cost

This is where you do the bundle calculation yourself
  • Plan value = $17.99 per month = $431.76 over 24 months
  • Set up costs = $40
  • Phone cost = $399
  • Total cost (over 24 months) = $870.76
  • Cost per month = $36.28
Therefore by upgrading sooner rather than later I am saving $13 per month or ~$300 over 24 months.  This is one of those few situations where it pays to upgrade and spend now rather than continuing on an expensive contract.

Have you done the maths and found a great way to save on mobile phone bills?  I'd love to hear what you went with!

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