Billing tiers - analysis and an idea

This started out as a request that never got sent, then resulted in a rambling email that never got sent, and I believe I have an idea that has formed from it.

(Note: all packages are in the form minutes/text/data)

Essentially this boils down to my own situation where a 2-line package on the 1000/1000/100 plan is $38.  The 2-line deal would be averaging 690/930/80 over the course of a year, taking into account all minutes under the current carrier plan.  This is more than reasonable by all means, hell it's even cheap.

The problem occurs when adding in a 3rd line user who currently averages 490/0/0.  They hate sms and have never had a smartphone, so that data *will* go up once exposed, call it 80mb, but sms... not so much.  This results in a plan that needs 1180/930/160.  Under current tiers, this requires 2000/1000/500 which for 3-lines is $71.  A difference of $33.  However, to meet those needs, it's more economical under the current tiers to just spend the $18 and get a 500/0/100 plan instead.  It's even more economical to go with 1000/0/100 for $27 or 1000/100/100 for $30.  A vast amount of that time will simply not be used, and it's cheaper.  At $27/$30 though, might as well go with a P+ with no taxes or fees and get 1200/1200/100 for $30 on the Verizon network.

What's missing here is a way to deal with this oddity.  1500 minute plans and 300mb plans are sweet spots, but their creation can jeopardize profit margins.

The current tiers are as follows:

Minutes

  • 0~100 : 3¢
  • 101~500: 1.8¢
  • 500~1000: 1.8¢
  • 1000~2000: 1.75¢
  • 2000~3000: 1.733¢
  • 3000+: 2¢ per unit

Overage is a rate which technically falls at the 433 minute mark.

Text

  • 0~100: 3¢
  • 100~1000: 0.5¢
  • 1000~2000: 0.4¢
  • 2000~4000: 0.275¢
  • 4000~6000: 0.233¢
  • 6000+: 0.25¢ per unit

 

Overage is a rate which technically falls at the 5190 text mark.

Data

 

  • 0~100: 3¢
  • 100~500: 2.6¢
  • 500~1000: 2.4¢
  • 1000~2000: 2.1¢
  • 2000~3000: 2¢
  • 3000+: 2.25¢ per unit

 

Overage is a rate which technically falls at the 1500mb mark.

 

A theoretical 1500 minute plan would basically need to either fall at 1.8¢ or 1.775¢, but let's assume the 1.8¢ for a nice $27 price.

A theoretical 300mb plan would be between the 3¢ and the 2.6¢, so let's call it 2.8¢ for $8.

Adding on this 3rd line would then entail an additional cost of $20.  Not a bad deal, but again, the problem still remains.  $18 for a standalone 500/0/100, however there is some extra time and data to burn in the group rate. And it's a buck cheaper than a 500/100/100 standalone.  So, all in all, it makes economic sense and beats P+ soundly.

Moving on to my second point.  There are multiple ways of handling an overage,  You are going with the 5% grace, which is cool.  Over here in China, they go with whatever the overage rate is, add it onto the bill until it hits the next tier price point and then automatically jumps up to that next tier.  The problem with this method, and it should be rather obvious, is that @2¢ a minute past the 1000 plan, you have to go all the way to 1850 until 2000 makes any sense at all.  Your margins don't lie in selling time/texts/data here, they lie in the UNUSED portions, and obviously the more you get the cheaper it becomes.  There's no incentive to bother upping to 2000 until you're nearly there.  And for data, the 2.25¢ is a cheaper rate than 2 of the tiers even have.  Sure, you can tweak things, but here's a cool idea instead.  Charge at the 1st tier rates for overage instead.  They are all the same at 3¢ a minute/text/mb.

For minutes, this creates price thresholds at: 300, 800, 1567 and 2567.

For text, this creates price thresholds at: 166, 1100, 2100 and 4100 - in fact, I would probably just leave text alone, it's all cheap to start with.

For data, this creates price thresholds at: 433, 867, 1600 and 2600.  

For my own greedy, self-centered self.  This would mean keeping the pre-paid 1000/1000/100 tiers and paying an overage of $7.80 a month, plus the $6 line charge, resulting in a $13.80 3rd line.  Total bill (before taxes) would be $51.80.  Yes, you lose out on the unused minutes, and if you wanted to, you could totally get away with charging a $5 convenience fee on top of it for exceeding without hitting the threshold and it would still be an amazing deal for all involved.  Alternatively, only offer it on voice and data beyond 1000 units, preserving the 500 and 1000 tiers in their integrity.  My bill with overages on the voice with a 1000/1000/500 would be $59.40 with the cost of the 3rd line @ $21.40.  Not beating the $18 mark of 500/0/100, but with less stress over the data portion.  Fairly straight forward as well and it makes far more sense than burdening your end with another entire account to manage. It's kinda win-win for everyone I think.  And it reduces the stress associated with a slight overage bumping up to the next highest tier that will never be used.  An extra buck or two? Not a big issue.  Know you are going over already? It won't cost more than the next tier up, and might even cost a bit less.

 

In fact, here's your copy for it:

Inbetween sizes? Voice and data for all sizes between L and XXL, 3¢ a unit with automatic upgrading (free minutes and data) once your excess is the same price as the next size up.  

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Comments

27 comments
  • My thoughts on a simple and fair billing method would be to pre-buy a single block of each service, say 1000 minutes, 1000 texts and 1 GB, not tying them to a particular month, and just charging the account for the next bundle when each block is exhausted. The $6/phone would still be monthly, but the rest would simply be charged as needed.

    I get the impression that Ting is set on their pricing policy and that it is unlikely to change, but I thought I'd throw the idea out there.

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  • That would essentially be rollover then.  And it would turn it into a prepaid service with maintenance.  Let's be honest here though, there are certain price points that ting HAS to be able to make in order to both survive and also make a profit.  And they most certainly deserve a profit from this.  My main issue was raised when figuring out the actual costs between lines 2 and 3.  Jumping from $38 to $71 is a rather steep increase and after taxes are added on, it can make it non-competitive with other options out there, while at the same time it's essentially possible to do a standalone line that accomplishes the desired end-result for cheaper... kinda backwards actually.   Charging a 3¢ overage with an automatic boost provides for thresholds that make sense.  Use 1200 minutes? ok, that's $6 extra instead of $17 extra with 800 minutes that will go unused, however based on the tier pricing of 1.775¢ (minutes 1001~2000), as far as ting is concerned they still made a profit of 143 unused minutes.  Once it hits 1567, the margin of $17 has been met, so just hand over the remaining 433 minutes as slack.  Again, profit points have been met.  That's not a precise 1500, but it's fairly close and it keeps the pricing simple.  Sure, it makes the bill have weird amounts, but thanks to all the taxes, it's a weird amount anyways, so that literally does not matter.  If these profit margins are cutting it a bit thin, then it can be incremented in blocks of 50 units as well for a nice round $1.50 a go.  The two categories targeted here, data and voice, have tier increases of $17 and $18 respectively when going from L->XL and XL->XXL.  Using a 50-unit block, that 12 blocks.  Not gonna whine and moan over a partial block.  It's more of trying to think up something that is fair to both sides, is simple to understand and leaves the customer not feeling ripped off by paying for 2000 minutes when not even using half of that tier.  The way that this is mitigated on carrier plans is by playing the marketing game.  Sure, you didn't use all your minutes, but look at those nights and weekends, or internal network minutes, or "hey, it's unlimited*, it's whatever you think it is".

     

    My main point in figuring out all this is simply because when a cheap 2-line, relatively low-usage customer adds in a 3rd line and sees a massive price jump, it's going to trigger these sorts of calculations.  In the end it results in more accounts to manage, more stress, more weirdness.  My solution pretty much resolves that for filling that "first 500 past the break tier" in a fair way.  If you are using 1700, yea, paying for 2000 doesn't feel unreasonable.  And if you are paying for 2000 with 900 of it going unused, if anything there's more of a motivation to either try and cut back usage under 1000, or use up more time to "get your money's worth".  Either way, it means less profit for ting, more stress on the consumer.

    How to implement this?  It can either be adhoc, or it can be a prebuy option.  As both units would cost 3¢ a pop with $1.50 blocks, there's no reason to pre-allocate, more of a unit-pool to draw from as needed.  Ting gets the cash up front, at a more or less guaranteed profitable rate, customers get more control over their billing.

     

    The only potential problem I can see with this is that it places less motivation to pre-buy the higher tier which impacts cash reserves, but at the same time, there's nothing stopping anyone from getting a 0/0/0 plan, prepaying just the $6 for the phone and settling up at the end of the billing period.  (I assume this ties into the higher prices on the phones as well, otherwise it would be far too easy to abuse the hell out of the network.  A part of the phone price essentially acts as a non-refundable security deposit on the service.  And I am honestly entirely cool with that.)

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  • Thanks for the thoughtful posts guys. Always appreciate hearing other people's perspectives on our pricing.

    That said, we're not looking at changing things at this point as people are overwhelmingly saving LOADS of money with our plans (although there will always be some situations where Ting doesn't make sense).

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  • Kevin,

    I just want to say THANK YOU to Ting.

    I just got my first bill and WOW. . . real cash savings!

    Now just waiting for the BYOSD so that I can transfer my other 4 Sprint phones.

    Again kudos to you and your team! 

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  • Ken,

    I agree that people are saving lots of money, but in the interest of features it seems like simply adding more package options would be a simple thing for Ting to do.

    A few more intermediate packages would be pretty nice for those of us who love to customize our lives and plan out every detail of exactly what we get and use.

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  • "Beating a dead horse" comes to my mind.  Wish I had a nickle for every thread on this subject    :)   I am guessing many people haven't seen the others.

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  • Yes, after I  posted this I found all  the other threads.  I still think it would be nice, perhaps some day in the future.

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  • I would also like to see an increment between 1000 and 2000 minutes.  I am adding my family and will most likely be around 1200 minutes unless I really watch it, because a click over 1000 is a costly jump in ting's world. I wish we could add buckets together to get the best economy (1200 min currently is XL or $35.  If you could make it 1 large bucket plus 2 small buckets it would be $18 + 2 x $3 = $24.)  It seems fair to me.....  That is where the Zact plan makes the most sense.  But I like ting and their phone choices enough to be a minute miser and try to stay under 1000, so we will give it a try. Hope they consider this in the future.

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  • Hi Anne, thanks for the feedback. We still don't have any plans to update our rates, but if we ever do we'll be sure to let customers know.

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  • This isn't a complaint and I understand you are not planning any changes but I just wanted to say that I agree with Anne's multi-bucket concept as making better sense and it just feels more fair and would fit better with the Ting idea of buckets and using only what you need.

     

    That said I would also like to see a different kind of bucket between XS and S or a sampler option that's maybe $1 for 10 minutes of voice, 10 texts or 10mb data. I appreciate the 5% grace given but I actually prefer to pay for what I use even if it's only the few kb of data needed when my phone updates.

    Also why is an XS bucket 0 it should be no bucket or something zero-ish.

     

    Anyways, yes I understand "no plans" and I'm happy with everything as is I just wanted to add my two cents.

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  • Hi Siguie, the XS bucket is labeled extra small so it's the same format as the rest of the tiers and easier to understand. We currently don't have any plans to add additional tiers or levels into our rate system. Thanks for the questions!

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  • I have a general comment about the 5% Grace. Like Siguie, I appreciate it but I wish it was more clearly descripted on your website, maybe it is, but I don't know where to locate it. Here is my problem: When you look at the tiers for minutes and you take the 5% at each tier I looks like this (see below):

    |

    Rate Tier

    |

    Minutes

    |

    5% Grace

    |
    |
     
    |  
    |

    0.05

    |
    |

    XS

    |

                   -  

    |

                   -  

    |
    |

    S

    |

           100.00

    |

              5.00

    |
    |

    M

    |

           500.00

    |

            25.00

    |
    |

    L

    |

        1,000.00

    |

            50.00

    |
    |

    XL

    |

        2,000.00

    |

         100.00

    |
    |

    XXL

    |

        3,000.00

    |

         150.00

    |

     

    But, I just spoke to someone from Ting and they told me that the 5% Grace period is not like the above it actually like this (see below):

    |

    Rate Tier

    |

    Minutes

    |

    5% Grace

    |
    |
     
    |  
    |

    0.05

    |
    |

    XS

    |

                   -  

    |

                   -  

    |
    |

    S

    |

           100.00

    |

              5.00

    |
    |

    M

    |

           500.00

    |

            20.00

    |
    |

    L

    |

        1,000.00

    |

            25.00

    |
    |

    XL

    |

        2,000.00

    |

            50.00

    |
    |

    XXL

    |

        3,000.00

    |

            50.00

    |

     

    The reason for my frustration is because I was carefully watching my minute use this past billing cycle and thought I was in the 5% grace when I used 1060 minutes. So I got billed an additional $17 for 10 minutes into the next tier???

    Any accounts adjustments in my future???

     

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  • Hi Nate, we do offer the 5% grace for each tier over XS. If someone were to use 1060 minutes, this would put them into the XL bucket, and we'd bill $35 for 1000-2000 minutes. The 5% would cover 50 of 1000 minutes, someone using 1060 minutes has gone 60 minutes over the L tier.

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  • Nate, I'm not sure why you thought 60 mins. was within 5% of 1000?  (1000 x .05 = 50  60>50)  Also I don't understand the second table you included. I doubt that is correct.  Either the Ting rep was confused or there was some confusion.

    Mike

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  • Instead of charging a block price, is it feasible to charge at unit price within the block?

    for example for 60 minutes call, instead of charging $3 flat fee, only charge $1.80? Just a thought.

    Minutes

    • 0~100 : 3¢

     

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  • Hi Hudong.  Essentially that would be setting up more categories and more complexity.  We're trying to keep it as simple as possible.  For example, we've just changed the structure to remove one bucket.  Here's a link to our blog post that discusses the change to our billing:  https://ting.com/blog/we-have-slashed-our-data-pricing/

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  • actually this will result in less tier for minutes. one will be charged 3c a minute until he reaches 100 minutes, then he's charged $3 for the first minute like now but charged 1.8c per minute from 101-1000. this essentially reduced the ting actual rate though.

    Minutes

    • 0~100 : 3¢
    • 101~500: 1.8¢
    • 500~1000: 1.8¢
    • 1000~2000: 1.75¢
    • 2000~3000: 1.733¢
    • 3000+: 2¢ per unit
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  • The rates that we offer our customers are pretty much cost price as it is. To change them and reduce them further would probably mean Ting could no longer operate as a company. While we always look for ways to make things better for our customers (which we have done as pointed out by Martin's previous post) the pricing is always something that is a topic of debate. Maybe we'll be able to reduce our rates further into the future but the call rates are remaining as is for the time being.

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  • This is more or less exactly the reality that has to be understood.  I originally made this thread because of a specific situation which resulted in an oddity wherein a price-cliff was discovered.  And guess what? The case was resolved by doing something very simple: Use more wifi when available. Tada, problem solved.

     

    Sure, we would all love a world of data agnostic metered billing, where everything is just calculated as the data it uses and billed at an according rate.  But that's a Sprint thing.  Ting's gotta make their money too, or there's no point in doing this.  Sprint makes the rules because they have the means and they have the excess capacity.  Sprint's gotta butter their bread on this. Ting's gotta butter their bread as well.

    Here's the problem with Sprint:  They are large and established and any drastic shift in strategy they make is difficult to sell.  Their current game appears to be the same as all their competition, mainly, "unlimited* everything", with limits on unlimited.  They charge a high enough price that their "average user" is gonna end up paying more.  The marketing sounds good, but it's trash.  They make a large margin off of that, so good luck convincing the board to drastically alter what's working.

    MVNOs (that's what ting is), get their bulk wholesale rates, which are set by a bunch of spreadsheet nerds to try and ensure that an "average user" on their network would still get better pricing on their network directly.  Or alternatively, ensuring that as they get to cut out support, marketing and other significant expenses, they see a higher margin regardless.  It also allows the base carrier to gain more total users, justifying network upgrades and expansions. It's the cola wars all over again now that the market is at saturation levels, wherein gaining customers is not as important as stealing them from the competition. Most importantly though, it allows them to see what other ideas might work down the line for pricing so they can pretend to be "innovative", without taking any of the risk themselves.  And there IS a BIG risk.  MVNOs fail all the time because they either have idiotic pricing or horrible marketing.  The difficulty is that the profile of a user who swaps from a carrier to an MVNO is also going to be the same profile that is likely to abuse a plan or attempt to drive the bill down so far as to kill all significant margin, or misplan on their small budgets and rant at support.  MVNOs traditionally deal with this by locking down users to junky little phones and milking all they can out of them, and as long as total price is cheaper than the base carrier, ok, fine, it can be tolerated as it's viewed in the same light as clothes that are cheap because of defects.

    TIng's different though.  The service ain't crap.  The pricing is realistic.  Good phone options and absolutely outstanding support.  They make their money with small margins on the bulk pricing and unused portions of the buckets.  With enough users to meet the margins, they can probably hack away at some more of the tiers if they wanted to.   As is right now, it's pretty much the best deal out there unless you are a heavy enough user that unlimited actually makes sense (not many people).

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  • I think Ting should charge $3 for the first 100  minutes, $6 for over 100 to 300 and $9 for over 300 to 500 minutes. I recently just crossed the 100 mark to 126 and was billed $9. Not very nice..

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  • I think it would be nice if you could just opt-in to per unit pricing for the things you use the least so you could still use the minuscule amount you use without feeling like you are way over paying per unit.  I would use about 10mb a month for example, but I'd much rather pay 30 cents for that rather than $3.  The result is I avoid using data even when I need it.  Call me cheap all you want, but I think frugality is what dove a lot of us here to Ting.

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  • I agree. That has been labelled "utility pricing" and has been discussed in a few other places:

    https://help.ting.com/entries/22938866-Tiers-in-100-units-rather-than-S-M-L

    https://help.ting.com/entries/23071748-Utility-pricing

    Ting's employees insist that people really don't want it. I found a few companies that do offer it. I ordered a SIM card from one called Truphone. It is in the mail. When it arrives, I plan to try combining it with a freedompop hotspot and Google Voice so that I can drive my monthly costs close to zero. If all goes well, I will switch. I read that the Truphone SIM counts as an international GSM SIM, so it is not subject to Sprint's domestic GSM locks unlike Ting's GSM SIM cards. I look forward to confirming that.

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  • Richard,

    Enjoy your Truphone and permit us to enjoy our savings here on ting in peace.

    Ting was initially looking at utility pricing until market research steered them in a different direction. It used to be most prepaid MVNOs were utility pricing. They either moved to plan pricing or went out of business.

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  • Sprint's domestic unlocks do not affect Ting GSM unless somebody is trying to bring one of the few GSM compatible Sprint phones.

    T-Mobile phones can come, locked or unlocked. Otherwise the GSM phone must be unlocked. This unlocking has nothing to do with Sprint whatsoever.

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  • Bruce, these are called Pay as You Go plans and MVNOs offering them are far from moving on or going out of business:

    http://www.cellguru.net/prepaid_compare.htm

    I have not even received the SIM card yet to be able to switch. I did order one for evaluation and I will consider a switch after I try it.

    That said, Ting's competitiveness is relevant to all of us and discussing it should provide Ting with feedback with which it could improve. If Ting's pricing had been ideal, I would never have looked into alternatives. The FEC fiasco lead me to begin to explore alternative possibilities. Some the things out there are things that I wish Ting offered.

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  • Bruce, the following page claims that you can insert a Truphone SIM card into a Sprint phone that is locked to Sprint's network, but unlocked internationally, and it will work in the US:

    "Since they’re a global GSM provider, this also means that all your older CDMA+GSM world handsets from Sprint, Verizon and US Cellular that were carrier locked out of domestic GSM providers but could still use foreign SIMs now have a local option. That’s right Verizon and Sprint iPhone 4S owners, you can now use Truphone as your domestic GSM MVNO as well without jailbreaking or doing stupid SIM card tricks!"

    http://www.techmeshugana.com/2014/07/trulocalphone-magic/

    Consequently, any Sprint phone on the CDMA network that supports an international ulnock could move to a GSM network via the TruSIM, which isn't possible with Ting's GSM SIM. Consequently, it is possible to stop sending money to Sprint without buying new phones. I wish it were possible to do this with Ting's GSM SIM card, but it is not. I still need to confirm this when the SIM card arrives, but if it is true, it is amazing.

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  • I said consequently once too many times, but I think you get the idea. If it is true, then it means that household cell phones that are locked to Sprint domestically can leave for a GSM network. I could then vote against Sprint's policies with my wallet and get more sane pricing in the process. If Ting offered the same, Ting wouldn't have to suffer when I cut off Sprint's income from my household, provided this works when the SIM card arrives.

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