*Price elasticity* Cut the price and the subscribers will grow!
The article said: "In the U.S. wireless service costs an average of 30 cents a minute and runs up to 75 cents. Some high-use plans charge a dime a minute, but the cheapest rates will have to fall to 3 cents within a few years to unlock new growth, says Andrew Cole, a consultant with Renaissance Worldwide. Now do the math: If overall rates fall by, say, two-thirds, even a 200% surge in usage leaves you treading water."
This assumes that cutting the price won't cause people to yak on the phone for hours. AT $2 per minute, it's emergency calls only. At 50 cents a minute, I make few calls, lasting a short time. At 10 cents a minute, I'll use 30 times as many minutes. It isn't linear.
The other thing is 'subscriber pays' which is the looniest thing. I bet a lot of people leave their phones off because they don't want to pay when somebody calls them. It is inherently the wrong way around. The person wanting the service should pay and the person making the call is the one wanting their call carried.
People will be put off getting phones because they'll know they'll be stung like this.
They are also put off by the deliberately confusing, hagfish slime of so many minutes at such and such a rate, but more on peak, but not off peak if you use it in your home zone which extends somewhere and when was the peak time anyway, unless you are roaming in which case you'll REALLY pay big if somebody calls you!
There is a very, very simple answer which will boost revenues and profits enormously. Caller party pays is the first part. The second is "CURRENT PRICE IS >>>" displays from Babe the base station so you know how much the call will cost and cheap prices can be used to generate business in quiet times.
This isn't USSR with a 5 year plan, so I'm not saying switch the whole system to "CURRENT PRICE IS >>>", just introduce it for those who want it and they will see how good it is and the provider will see how much extra money they make and they will be very happy. More and more people will crowd in when they see how much money they save and how many calls they can make.
Dumb providers will try to rip people off and lose custom to those who price it correctly.
Mqurice |
