Does a fixed cost reduce your spend?
In my current role to develop business for virion business voip phone systems I’ve come across some fascinating information about fixed costs. Fixed line customers are being sold on the idea that a fixed cost will insure them against a potentially exorbitant phone bill. They are being told that, for a fixed cost, you can make unlimited* calls. Telstra offer this service through their dealers (when I last checked today) in a product called BusinessLine and I was fascinated to learn about it because it has been around since 2001 according to a post on the ATUG (Australian Telecommunications Users Group)..
The problem only seems to appear after customers are in these contracts for a while or so and when they look at their call spend to discover that they might not be best on a fixed cost contract after all. Does the fixed cost concept provide you with a better rate or does it provide the telephone company with income insurance to ensure a consistent revenue?
I recently did some research for a virion business voip customer who was using voip for all their outbound calls and noticed that their bill didn’t come down as much as they expected. After receiving a copy of their last Telstra bill and performing a phone bill analysis I discovered the BusinessLine Select FFF and a Google search led me to the pricing of this fixed price offer. It may have been a good offer in 2001 but with local and national calls commonly at the same rate with most Telco’s offering untimed calls, the old rates just don’t seem to cut it.
Telstra BusinessLine Select Plans
The problem with these charges is that they are on top of the almost $40 per line you pay Telstra as a business owner.
The customer with this bill is best of cancelling all these fixed payments (saving them $130 per month) and replace 2 Telstra PSTN lines with 2 VoIP services (saving them another $50) per month. Most prudent small business owners use their fixed cost mobile plan to call mobile numbers and their landlines to call local, national and international and line rental is one of the biggest burdens in having a PSTN phone line. One PSTN line and a business grade Broadband plan is all you need to start with and any extra services can now go through your Internet.
The only time a fixed price is good is if it is cheaper than your monthly average spend over a 12 month period and cheaper than the available technology of the day. In this scenario it’s not good.
*Is there such a thing as unlimited really? It’s an issue covered in this blog post about Fair Use Policies.