Utility pricing

Hi all,

In an earlier post, Ken said:

The only COMPLETELY fair way to approach it is "pure utility" pricing where you pay per minute, message and MB. Of course people will then say they want per second and per KB. :)

We DID look at pure utility pricing but in our analysis and through tons of discussions with focus groups, behavioral economists, early customers and retail experts we determined that going from "all you can eat" plans common in the industry to completely "a la carte" was too big of a leap for most customers.

I understand why this decision was made. And yet, Ting's goal is to make mobile phone service simple. What's simpler than "minutes, messages, and megabytes"? It works for electricity, water, and sewer; why not for cellphones?

Anyway, the point of this thread isn't just to rehash the idea of pure utility pricing (though I do hope that you will reconsider it, as you grow and become more successful). I wanted to propose a compromise, which I think maintains the spirit of your current plans, but adds a bit of fairness for customers with intermediate usage levels.

The way you explain it to customers is this: your plan includes some number of minutes, messages, and megabytes, and then you're charged the per-unit charge for each extra unit you use. At the end of the month, Ting readjusts your bill by picking the cheapest plans for your actual usage.

More precisely, the amount you pay for each category would be the lower of two numbers: the cost of the smallest category which exceeds your usage, and the cost of the largest plan that doesn't exceed your usage plus the per-unit charge for the remaining units. (This would replace the 5% grace period.)

For example, let's say you used 300 minutes. At the M tier, the cost is $9. At the S tier, the cost is $3, plus $4 for 200 minutes, for a total of $7. So you'd pay $7 for 300 minutes.

At 400 minutes, you'd pay $9 either way. So once you hit 400 minutes, the next 100 minutes are free. Contrast that with the current system, where once you hit 106 minutes, the next 394 minutes are free! In the proposed model, the cost difference between 399 and 400 minutes is two cents; in the current model, the cost difference between 105 and 106 minutes is six dollars!

Obviously, to make this revenue-neutral, something would have to get more expensive. I don't have access to your financial information, so I can't make any guesses, but I can say that I'd be happy to pay an extra penny (or so) per minute/megabyte, in exchange for a more continuous price curve.

I know that customer feedback is important to you, so I'm hoping that if I and others express a preference for something closer to pure utility pricing, you'll give it more consideration. :)

Thanks for providing an excellent service, and keep up the good work! :)

~ Aleks

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Comments

50 comments
  • Thanks for the great feedback. And for actually reading what I posted before! :)

    I see what you're doing here. I think it might come out closer to utility pricing but I'm not sure it passes the "simple" test as it's added another level of complexity and conditional pricing.

    If we ever change our pricing structure (and I want to be clear that we have no plans to do so) we'd probably want something even simpler than we have now. 

    We love the discussion though, so feel free to keep suggestions coming!

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  • How about having utility pricing as a separate option? You could default every new customer to choosing from the pricing plans you have laid out, but after the customer has tried it for say one or two months give them the option to choose utility pricing. Or as an incentive to long standing customers give the option after they have been with Ting for one year, sort of thanks for your business. No matter what Ting decides, I'm 100% happy with the current model and understand that businesses need overhead and profits to survive. Ting just chooses not to keep gouging till there's nothing left.

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  • Well, a separate pricing option is an, err, option, but not ideal. Right now we have one model that EVERY customer is on. It's always been hope to avoid having different types of plans to chose from (and for us to support).

    Never say never though. :)

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  • I agree that having only one type of plan is the way to go. For other companies, the pricing always seems like a huge mystery. I think the simplicity and transparency you have is much more important than the details of how the pricing is considered.

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  • I know this thread is a little old, but it was the closest match for my current concern, which is this: I go over the 1000 mb data bracket by less than 200 mbs pretty much every month, and it happens during the last 3 or so days of my billing cycle.

    I have a data tracker on my phone, but it always says I've used about 50-100 mbs less than what Ting says I use. I've tried 3 different trackers with the same results.

    I have tried to cut out usage, trust me I have, but I NEED to use the amount of data I'm using.

    What this means is that I pay $18 extra every month, but don't even have the opportunity to use what I'm paying for, nor do I want those extra mbs.

    I know that for a lot of people this saves them money, but for someone like me, it is WASTING money. It's doing the opposite of why I switched to Ting in the first place, and I'm seriously considering leaving because of it. Sure, for some people it's awesome that the plans increase exponentially, but for me it really sucks, and I can't be the only one.

    If we're being honest, the reason behind it is that you guys make more money this way. That's not an insult, that's just reality. That's the goal of every company, profit. But Ting at least tries to run under the guise of having a little more integrity, so it would be nice if you at least tried ONE alternative pricing system so that the group of customers like me isn't getting screwed every month. Making less money off of us is better than no money when we switch to other carriers, right?

    I don't think complete utility pricing, "a la carte," is necessary, and I agree that simple is better. I just don't think it would really complicate things that much if you had just one alternative plan, that say, increased in even incriments, such as 500 mbs of data, at an even rate per tier. (That's actually a

    little simpler, is it not?) Let the people who benefit from the current method stay on it & just give us who don't one alternative. There's not much complication there, it's just flipping a switch, check this box or that one.

    Fewer people get screwed over, fewer people leave, more might join BECAUSE of the option, and. more customers=more business=more money. I really don't understand the reluctance. It seems like a no brainer to me.

    Sorry for being blunt, but it's 2 days before my billing cycle ends and I just got bumped to the next tier so I'm a little grumpy. This is going to stress me out for days. It's like phone PMS every

    month I have to throw 18 bucks out the window.

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  • *correction: complete utility pricing is NOT necessary, is what I meant to say there.

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  • Ha, nevermind, read it wrong...see what the stress of this does to me? lol

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  • Sarah,

    You say you are wasting money on data,

    Do you mean that you could get the data service cheaper from another carrier?

    If so, perhaps Ting is not the best carrier for you.

    If not, you are not really "wasting" as much money as you would elsewhere.

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  • It is a waste of money to be forced to pay for 800 mbs of data I can't use within two days time. If you break it down I actually use about $1.80 worth of the $18 I pay for, so Ting makes $16 off me every month that I get nothing for. You're telling me that's fair, or somehow not a waste of money for me?

    I could go get unlimited everything through another carrier for $40 a month & it would save me that $16...Then I have to buy yet another phone, so I've also wasted money on the phone I have...Then I go tell everyone I know what a waste of money it was switching to Ting, and talk about it on social media, and Ting loses more customers. Again, not trying to be mean by saying that, that's just how the world works.

    It seems like it would be in the best interest of the company to be more customer friendly, especially when that's the principle it touts on the website. It doesn't do anyone any good to just tell me, "Well leave then."

    The whole premise of Ting service is to only pay for what you use, and I'm paying for a lot more than what I use. Am I not supposed to be upset by that? As a Ting customer am I supposed to not speak up when I have a concern about my service?

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  • Sarah,

    Ting make no secret of the fact that thay are not the best solution for every customer. They say that a majority of cellular customers could save money with Ting.

    I do not know of a major carrier offering truly unlimited voice, text, and data for $40 per month Personally, I now have 3 phones with Ting for slightly less that the discounted pan I had for 1 phone with Sprint.

    You could easily move to a different carrier and sell your Ting phone if their pricing does not suit. you may not be part of Ting's target market.

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  • If you're a cellphone carrier, your "target market" is anyone who uses a cellphone, especially your existing customers. I'm not happy with the city I live in either, but I'm not going to just move, I'm going to try to make things better. Since you're a Ting customer rather than an administrator, I guess you're not my "target audience."

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  • Sarah,

    Thank you so much for your feedback. You've painted a very detailed picture of how and why our current pricing model doesn't completely work for you, and we absolutely appreciate your sincerity on that front.

    As I'm sure you can see by going through this thread and perhaps others, a lot of thought has gone into our plans and how they're arranged. As you can see in even just this thread, we're both aware of and have considered alternatives, but at this time, we are committed to the current plans.

    With that said, however, our plans could definitely change in the future, and we 100% appreciate your adding your voice to this discussion.

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  • +1 to more fine-grained pricing structures. The jump between levels is so coarse -- can't you provide a linear scale with more levels for both pricing and resources?

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  • Ting,

    You might want to look at how Zact is explaining their pricing structure, which is similar to Ting.

    In my mind, their presentation is *much* clearer about how the "buckets" work. I think many people ignote the Ting video link. They expect all relevent information to be displayed on the web page.

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  • Zact's pricing structure is very much better because it has finer grained levels and charges nothing for device activation.

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  • Ting does not charge for device activation either.

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  • Not exactly true, it charges $6 per active device per month. I recently activated a phone on Ting and was charged $6 for it. A few days later, I decide that I like Ting and ported a number from my previous provider. I was charged another $6. I'm not sure whether "device activation" is the right term to use here, but certainly, I'm being charged something per device.

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  • Eugene,

    Apparently, Zact does charge an activation fee.

    Zact charges $4.95 per device per month.

    See the footnote at   http://www.zact.com/cell-phone-plans

    *A monthly line maintenance charge of $4.99 plus taxes will be charged when you activate your phone. An account activation fee of $10 is charged when you check out.

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  • Bruce,

    That is very interesting. Thanks for the information. Would love to see Ting bring more tiers into the current pricing structure. 

    Eugene

     

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  • Thanks for the suggestion Bruce.

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  • +1 To add more tiers / more linear pricing.

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  • I would also LOVE more linear pricing. I'm coming from a background using services like Amazon AWS where I pay by incredibly small units. No two monthly bills have never been exactly the same in the years I've been there, and I'm quite happy with that. I pay for exactly what I use, and not a thing more.

     

    With Ting, I feel like your hearts are in the right place as far as your business model goes, but I ultimately end up paying for more than I use every month. It's almost impossible to use EXACTLY what I'm paying for. For example, I spent the last month trying (on and off) to get my third-party ROM-running phone to connect to Ting, and only this week got it working. During the billing cycle, I used 8 minutes but paid for 100. I know I would have probably paid loads more with any other carrier, but it still bugs me that I essentially paid for 92 minutes that I never used.

     

    With data, it gets even worse. I rarely use more than 100 minutes in a month, but I could easily suck down a couple GB in an afternoon. I have to set limits on my device to keep apps in line. I aim for under 100 MB, but sometimes I'll go over. When that happens close to the end of the month, it's basically an incentive to use up all the data I can until the next tier (~499 MB); I paid 10 bucks for it, so I may as well use it.

     

    I guess it might confuse some people, but I would be really happy if rather than tiers, I could pay per-minute, per-SMS, and per-MB. Or at the very least, have much much smaller tiers.

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  • Hey Dan, Thanks for your interest. We see where you, and others are coming from but we feel we have a solid price model. If you are interested, recently Elliot Noss explained why we use the model we do in a Ting Ask an Exec feature.

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  • I must agree emphatically with the general idea of utility pricing and think that some version of it should at least be offered as an option. 

    -- It really is much simpler.   The current system of tiers is confusing by comparison.

    -- it is familiar.  It's the way we pay for electricity, gasoline, water, etc. 

    -- For those who prefer a predictable monthly bill you can offer an "equal payment plan" like that offered by electric and gas utilities.

    -- The current tiered system is counter-productive in that it can make Ting pricing uncompetitive for some use cases.  For example I have had a Datajack account which costs $10 month for 200 MB.  I use a mobile hotspot for regular email and todo list checks and occasional map downloads.  I typically use about 150 MB/Month.  That pushes me over the Ting 100 MB tier into a $12/Month plan with does indeed get me up to 500 MB, but I don't really need it.   The extra $2 is not a deal breaker for me given the other advantages of Ting, but it is a cost rather than a savings.   I suspect there are other such examples, and probably some with more significant numbers.

    -- The current tiered system also allows customers to coast along paying only device fees and zero for usage.  I think it would be perfectly reasonable to charge a small minimum usage fee (say $6/Month) if all usage fees were per unit rather than tiered.

    Tangentially related point:

    AFAICT Ting rates for small amounts of data are competitive, but become less so as usage increases.  Over a gig AT&T starts looking better.  You may want to take a look at this.

    General observation:

    Over the years I have found so-called "expert opinions" on the future of and/or marketing of technology notoriously unreliable.   I can recall hearing impressive explanations of why Ethernet could never run over twisted pair, of why PCs would soon be replaced by thin clients on most corporate desktops, of why the iPad would never sell, etc, etc.  That's not to say that all experts are always wrong and I'm sure there are experts worth listening to, but if your experts are saying one thing and your customers are saying another, I'd go with the customers. 

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  • Lessons not to learn from Zact:

    I just heard of Zact for the first time in this thread so decided to check them out and found that they are just now terminating service.  Apparently part of their appeal was billing in small increments, which along with their failure could give the impression that utility pricing doesn't work, but it;s my impression from the litle info I've seen that the way they structured their pricing may have been more confusing than Ting's.   AFAICT in order to gain the benefits of simple utility pricing you'd need to charge by the unit of utilization.   Introducing tiers however small complicates things.  (Would buying gasoline by the 5 gallons really be better than buying the 10 gallons?  No we buy gasoline by the gallon.)   There may have also been problems completely unrelated to price structure, like the fact that they've been around for a couple of years and I've shopped pretty aggressively for service I did find Ting (and many others) but did not find Zact. 

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  • OK, I just watched the video and found it remarkably unconvincing.  No, make that anti-convincing.

    True, Dan Ariely is brilliant.  I've admired his work for years.  However, like many folks who are remarkably brilliant most of the time he is human and not immune from moments or remarkable silliness   In this case, yes, pure unit pricing can be a buzz kill in some cases as in pricing dinner out by the bite.  However, if comparing buying phone service to dining out is not the worst analogy I've ever hear it's on the short list. (I'm assuming for the moment that the analogy to dining out was intended by Ariely to apply to Ting and not just an example that Elliot Noss chose to misapply to Ting.)  Buying phone and data-comm service is much more like buying electricity, or natural gas, or water, or gasoline.   When we dine out we are concerned with the total dining experience, not just the food, but the time away from work, the atmosphere,  the company, the gestalt.   There is no total phone and datacomm service buying experience in same sense.  They are basically a commodities or utilities.  While forums like this do make it more than that what we are discussing here is the exact nature of the commodities and how we buy them, they are not ends unto themselves.  I doubt anyone here regards buying phone service as the price of admission to some really cool forums in the way we might take someone to dinner in order to have a conversation.  It is not at all the same as dining out.  Attempts to embellish commodities with the panache of "experience" strikes me as exactly the kind of marketing hype Ting is NOT about.  

    Of course if we're talking about less elegant dining we often do pay by units of consumption.  Not by the bite, but by the glass, by the hot dog, etc. We don't usually encounter tiers of one to five burritos, five to ten burritos, etc.   True, there are bundled dinners, and we buy french fries by the container rather than one at at time, so the analogy is not perfect, but we still routinely accept that the next unit of consumption will bring a new charge.

    If the analogy to dining out has been the main rationale for the tiered structure it may be time to rethink.  

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  • Sigh. 

    In retrospect that seems like a very long-winded way of saying that if we are to compare buying telecom services to dining out then utility pricing is analogous to ordering ala carte, which is of course commonplace and not necessarily inordinately stressful.   Sorry for the excess verbiage.

    :-)

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  • Here's a good way to relate Ting to the restaurant analogy:

    You go to a restaurant, order a meal, eat your meal, and pay for the meal. The next day, you order the same meal, and while you're eating decide that you'd like a refill on your drink. The waiter informs you that in order to receive another drink, you must purchase another meal.

    This is what it feels like when I use 125 MB of data in a month.

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  • This is more realistic, and more akin to what Ting dose:

    You go to a restaurant, order a meal, and while you're eating decide that you'd like a refill on your drink.
    The waiter informs you that in order to receive another drink, you have to pay for another drink. There are no refills here. Then you get the new drink, drink only the first third, and call the manager to ask to only be charged for a third of the price of the drink.

    Unfortunately for you the drink isn't charged per-drop. Instead it's charged per cup just like Ting charges per cup of data.

    At the end of the day you no mater how Ting charges you have to look at what you end up spending per-month on phone service and ask yourself if it's worth it. If it is it's fair and don't worry about it. If you feel it's not then cancel survive until you find someone who is fair or you change your mind.

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  • Why is it this forum never registers my line breaks (hitting enter)? >.<

    This line should be below the first. It looks like it is in the txt box, but when I hit post it's not and it all just comes out as a wall of txt.

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