All of Ting's Devices Increased by 10 Dollars Simultaneously?

I find it interesting that all of Ting's devices increased in price by 10 dollars at the same time. I can only wonder why....hmmmm.

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31 comments
  • Hi Trenton. We're doing some testing on device prices.

    As I think we've shared, we have been subsidizing all our devices. That is a tough cost for us (in addition to the low margins we take on usage). We are testing to see whether that investment really gives us a significant return in new customers or whether we would do about as well getting new customers through the door if devices were priced a bit higher (cost us a bit less). We just want to land in a place that gives us a healthy, sustainable business and gives customers a whole equation (device price plus monthly savings) that works for them.

    By the way, we have divided up the country randomly for the test, so I promise we are not doing any weird geo-targeted socio-economic price tiers or anything like that.

    I am sorry for any confusion or disappointment. If there's something you saw for $10 less that you want, let us know and we'll help get you that original price.

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  • I noticed the price increase as well.  I thought it was no big deal and figured you were losing too much money on the phones and just needed to up the prices.  But after reading Michael's explanation, this sounds like quite the slimeball move.  You are randomly charging people different prices with no reason for why person A is paying more than person B???  This sounds very much like an anti "Ting way" thing to do.  If you want to raise prices for the phones, then just do it.  Don't run "tests" on people where you treat customers like data points and give them different prices at random.  My respect for the Ting business has dropped quite a bit with your response Michael.

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  • You think it's cool to our customers and wise for our business to just raise prices on everyone without knowing what the result would be but slimy to test it first? I want to understand that better. Can I call you?

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  • Yes it's absolutely cool.  It's open and honest.  It's not hiding.  It's absolutely slimy to run "tests" in this manner.  How about doing some polling and focus group testing as you have said you used to make the decision to do buckets?  If you can't understand this then there's no help for you.  I have no desire whatsoever to speak to you on the phone.  I am completely stunned at your response.

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  • I don't see any problem with testing a pricing structure. I believe with the addition of the refurbished devices the subsidies should be removed altogether. When operating a business you work to optimize pricing. The only way to know what the effect of the pricing will have is to run different prices in different markets simultaneously. If you notice a drop in sales that is determined to be unacceptable then the prices should be reduced. I used to work for a wireless retailer who resold Alltel (a great cell company before Verizon took over) and there would be phones in the line up that because of purchase prices and sales being ran by Alltel we could not afford to match the sale price. Instead of simply taking the hit on the phone we would raise the price beyond what the corporate sale price was and then lower another device's price when we were able. We would off sell of the device with poor pricing onto the equipment we were able to price more competitively. This strategy is what allowed our small company to stay open. We strove to provide top notch customer service and had fantastic customer retention rates. I see no problem with Ting trying out different strategies.

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  • I also don't see a problem with testing, especially given this relatively mild approach. It's really no different than the marketing demo/sales approaches like kiosks with a product at 20% less than retail, but only if you happen to drop by that specific store in that particular major city at that particular time. (I ran into one of these just a couple months ago. Apparently it didn't pan out because that store doesn't stock the product now.)

    Being online based has the potential to do some PR damage, simply because people - and deal sites - will do comparisons, but I don't personally object to it in these amounts. Ting is hardly the first or largest company to do this kind of testing online.

    I'd probably be annoyed if the price swings were closer to 30% or something equally bizarre that comes across more like a lottery, but that's not what's happening here.

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  • By the way, Cody asks a fair question about using surveys or focus groups to inform these sort of decisions instead of in market testing. It's absolutely true that we should learn everything we can through listening before messing with the live offering. And we continue to do that, both qualitative and quantitative. But in my experience, price elasticity is one of the things you just can't really determine with any certainty unless it's real. (There's no way to get at how much less someone would truly want something if it cost a bit more. Or how much more someone would want want something if it cost less. If you ask me, I'll tell you I want it to cost less.)

    Separately, there are a couple of themes that emerge again and again in these forums that I find interesting.

    The first theme is that we are targeting a more observant, engaged and (frankly) intelligent customer than most of our competitors. It puts pressure on us to embrace that (for example, invite hacking rather than suppress it) and to be prepared to talk about this sort of stuff. I do hope you appreciate that we try to do just that.

    The second theme is our success as a business. And it plays back to the first theme. Our customers get that we need to find a model (mostly pricing) where they save money and we profit. That comes up when we talk about businesses like Republic Wireless and FreedomPop or unlimited plans. Our customers never seem to stomp their feet and simply demand that we give more for less. (Cody, I really appreciate that you said 'if we want to raise prices for the phones, then just do it.' That's rare. The only issue there is that it could be a terrible decision. It could cost more customers than it's worth. The right answer might, in fact, be to lower prices. That's why we need to test.) We really, really appreciate that. We're in this together and there seems to be plenty of opportunity for us all to do well.

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  • Hah! I love this thread.

    I guess it just goes to show you that you should have put a little more time in the algorithm and not done uniform price updates, but made the markup strategy a bit more complex to avoid being caught. Region A should have only had a subset of devices marked up $20, others $10, and others not at all. Then mix and permute. You would have gotten the same data, just with raising fewer red flags.

    This is basic market analysis. You think this doesn't happen elsewhere? Why do you think the big providers force you to put your zip code in before showing you their prices. It's exactly the same thing. If you think pricing models aren't tested in brick and mortar stores that have nationwide spread (Walmart, anyone?), then you're very naive. Heck, Amazon's prices swing every hour or two based on supply and demand trends. This is one of the basic tenants of pricing, market research, and one of the holy grails of business: trying to find the highest price that the market is willing to bear. There's no lying or deception going on here. The price is clearly stated, the customer still has the choice to purchase the item. It's precisely how far this willingness extends that they're trying to evaluate. I'm just surprised they admitted to it. But then again, Ting is far more forthcoming than other companies, so I guess it's not a total shock.

    With BYOD just around the corner, this will largely be moot anyhow (it's already basically that since they allow donor phone usage). The functionality/price ratio for used phones from ebay and the like far outweigh anything that a new phone provides. If you're the type of person that would be influenced by a $10 price swing, then you're sorta playing in the wrong market if you're considering a $500 phone (it's a phone, for heaven's sake). If you're looking at the $100 price range, then yes, $10 is a fair amount, but you'd get a much better deal on ebay, where a phone in like new condition like the Google Nexus 4G or the Samsung Epic 4G Touch can be nabbed for $100 or less.

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  • I don't see a problem with this at all either, I mean you guys have to sustain yourselves and be profitable at the same time.  I think these practices are done all the time.  $10 is nothing really on phones that cost this much already.  It seems like the BYOSD program will help you guys save money on all those phones you have to subsidize and keep stockpiled in inventory.  I am really curious to see how many phones you guys sell after BYOSD goes into effect.

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  • That's the Ting (get it...Ting? not thing hahaa) They would much rather not sell phones at all, because they're actually taking a hit with the subsidy and all that (and then the returns, etc etc). They would far prefer to just activate a device that they don't actually have to ship back and forth and replace if it's broken, etc. That's where they sink a lot of money. So really, they're just trying to stay afloat and take less of a hit with the subsidy. Even Ting doesn't charge full price because these stupid phones are inordinately expensive. Frankly, the sooner we can eliminate subsidies, the faster phone prices will begin to fall, making  a happier world for everyone, I suppose we can only tackle things one step at a time though.  :)

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  • I really enjoy this thread. Very few places do you have a customer base that seems to understand the economics of running a business. Lately it seems profit is a dirty word. We all need to support Ting in establishing their pricing structure if we want them to be around for years to come.

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  • Wow, I freaking love our customers.

    I want to tease out a couple of points a bit more just because I'm enjoying this and because you guys are basically doing a lot of my thinking for me right now.

    Regarding "should have only had a subset of devices marked up $20, others $10...", we felt like we couldn't do that because the relationships between the prices on the page are so important. If you can get a smartphone for $80, for example, a feature phone for $70 starts to seem silly. If we mess with those relationships between the devices on the page, those dynamics would be driving a lot of the purchase decisions rather than a clean response to an extra $10. We felt like we had to keep the deltas between the devices locked and move them up and down together. Does that make sense?

    You guys are pretty much dead on about BYOD. Devices have been nothing but a burden to us. They represent a hurdle to the customer and a hassle and a cost to us (for all the reasons you mention). I think we are 95% thrilled to never sell a device again. I'm just wrestling with one small bit of anxiety, which might be completely silly. A ~$500 purchase upfront has (inadvertently) been a convenient anchor to keep customers with us for a long while. Obviously, I can't have it both ways and we have way more to gain from fluid movement between providers (because we're better!). But our business could end up looking a bit different. A lot of folks will conceivably use us for a couple of months in between contracts (and the irrational allure of a financed device). On one hand, who cares. As you say, they won't cost us much. But we do have acquisition costs to bring them through the door. And customers become less costly over time as they need less help. And they become more likely to refer other friends. So we'll have a base that includes way more of these "forever new" customers that won't necessarily give us the return in usage or love to justify the acquisition and support costs.

    I guess all this just pounds home the fact that we need to do a good job. (So I'll get back to work now.) We need to keep giving people reasons to stay.

    This is somewhere between an internal planning session and therapy. I've said too much.

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  • I really appreciate the transparency here.

    I feel more confident interacting with a company that is explicit about what it is doing and why.

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  • Great thread.  To me and I think many others, the mere fact that you have to purchase the phone outright is still a bit shocking, when in the US we've been so conditioned to "free" or $1 phones with x-year commitments.  Once having absorbed that rational leap ("I have to buy the phone but the service is cheap and fair") I don't think $10 would sway anyone one way or the other.  But it's news to me that you were subsidizing your phones; I thought they were sold at cost or a bit higher.  (Last I noticed, other prepaid vendors seemed to be selling the same models for much less.)

     

    I would completely understand if the phones were just priced at cost + $5, mostly because that's what I thought you were already doing.  :)

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  • One more thumbs up on this being a great thread.

    Michael, you mention that Ting is targeting a "more observant, engaged and (frankly) intelligent customer than most of our competitors".  I just have to say that I think without having to even target that type of customer, those are exactly the type that are going to gravitate towards you anyway.  A very large portion of the public has absolutely no idea (nor do they probably care) how much their phones truly cost, therefore they are either not able or willing to do a fully exhaustive comparison of pricing models.  I've seen it in a couple of people that I have tried to show them the "Ting difference" - I show them the info and they say "but the phones are so expensive - I can get it for $xxx at the other company" and they just can't get past that, no matter how much I say "but, but.........".  They won't sit down and actually run the numbers to figure it out.

    Therefore, essentially by default, you're going to only get the customers that "get it" - those that will DO the math to figure it out..... those that WILL finally understand that Ting is just plain not like the other phone companies that are out there........  those people that will actually come into these forums and read the comments to try to figure out what it's all about .  Sure, they probably don't believe most of what the other companies say either, but that also jades them when they see what Ting has to offer and think "ok, so what's the catch?".  

    By the way - how many other phone company has an area on their own website where they host an open forum where comments are allowed - good or bad - on any (reasonably moderated) subject where this discussion right here could even happen?  NONE !!  This alone was a large attraction for me to Ting (well...... that and I also did the math - LOL).

    Sorry to sound like a commercial for Ting, but this thread is just one more thing among many that reinforces that I made the right decision and won't have "buyer's remorse" like I have so many times before  ;-)

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  • Oops, someone has already mentioned to me that Republic Wireless does have a forum area - and sure enough they do.  So does Sprint.  So maybe I should have done some research on that ;-)

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  • I was going to say you left out the part where Ting accepts and encourages talk of phone hacking, rooting, and even legal cloning.  I kinda doubt any other carrier allows a whiff of that talk.  So your love letter was legit.  :)

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  • Lol, agreed - and I thought about putting something in about that, but I figured that's an even smaller portion of users than just those that would gravitate towards Ting in general that they'd already be part of those that "get it" and the benefit of "sanctioned hacking" is just a side bonus.

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  • As others have stated, this forum and this thread are great.  A couple comments:  

    1. My history with Sprint is way old, BYOD is not an option for me unless there is a reputable market for Sprint devices off contract. Ting is reputable and fair.

    2. My wife wants nothing to do with smartphones, so yes, I would buy a feature phone at $70 (I did) even if there was an Android for $80. This also applied when I brought my teenage son over; we want him limited to text and voice for another year or two.

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  • Looks like Ting lowered the devices back to their original prices.

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  • Wow, y'all don't miss a beat. Yes. And since we're all in this together, I'll share some details! It turns out price elasticity on devices is greater than we thought (particularly on the low end devices). While we save some money by reducing our subsidy on these devices, in this case, it's not worth the loss in new accounts and existing accounts adding new users. We'll test some more. Maybe we need to bring the devices down even a bit further. My fear there is that this is not just a short-term savings versus customer acquisition equation. I wonder if devices getting too cheap would bring in lower quality customers who would jump the second they see a deal somewhere else. In that case, it would be a mistake to "pay" too much (in the form of a device subsidy) upfront. We'll see. Thanks for paying attention!

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  • Have you guys considered offering refurb feature phones in order to balance low end device costs?

    In other words, say ting gets new brios for $70 and refurbs for $30. Assuming a 50/50 sales split you could then offer new brios for 60 and refurbs for 40.

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  • It's a good thought. We're looking at everything, including striking deals with third-party services that focus on refurbs. And I would think you would be right that the difference in demand, in your example, between $30 and $40 would be minimal since it's so low either way. But price elasticity seems to exist at all price levels and we need to make sure we don't worry too much about our costs and lose opportunities to get great customers through the door. Thanks.

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  • So many of the comments I had have already been said... this is such a great thread!

    @Michael G., I too was under the impression that Ting was selling "at cost, plus small profit".  I had no idea you were subsidizing.  And yes, ting customers are freaking awesome!  ;-)

    I'm an engineer, not a business guy, but... 

    I believe that $10 across the board was the wrong (easy) approach for data gathering.  Consider your audience here, the enlightened.  :-)

    For those of us wanting a top of the line $500 phone, $10 is not a deal breaker.  But for those looking for a cheap standy, or low tech phone for very young (or very old) family members, then $10 is significant. 

    It's essentially % increase that we "feel".  It's only 2% hike on a $500 phone, but a 14% increase on a $70 phone. 

    But you should also consider your recent sales, i.e. supply and demand.  If you are moving a device fast, you are probably under-pricing it.

    It sounds in your latest comment like you were approaching this idea already.

    Back to your "new customers wanted" comments, I agree.  You probably ought to subsidize a little bit FOR NOW to build customer base.  BUT, once BYOSD starts (and I'm hoping BYO(Any)D eventually), THEN you shouldn't worry so much about selling devices.  In fact, you could theoretically get out of the device sales business and just point people to Amazon or other good sources.

    One other point for getting new "tech savvy" customers... a really cheap donor phone, since all they want is a clean Sprint/Ting EIN anyway.  $53 Optimus is not bad, but I'm wondering if you could get refurb flip-phone around $20.

    Good luck!  And unless the boss frowns on it, I don't think you should be afraid to brainstorm with your customers about business strategy.  We WANT Ting to succeed!  If you guys fold, we are SCREWED and will have to go back to the evil "plan" system!  :-D

     

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  • Thanks for the feedback and kind words Mike.

    We did think about doing percentage increases and/or decreases. If (when) we do more testing we'll probably use that approach. We'll probably do other kinds of tests as well as we get more sophisticated. We love facts!

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  • Looks like Ting is testing prices again by raising them.... (as of January 23rd, 2013). Though, it doesn't look like all of their devices increased in price by the same amount. It looks like the initially lower-priced devices got increased by a small amount and the higher priced devices got a larger increase. For example:

    Optimus Elite was initially $193. Went to $199. Change of $6.

    Galaxy Nexus was initially $404. Went to $416. Change of $12.

    Galaxy Note II was initially $625. Went to $644. Change of $19.

    From these facts, it looks like Ting is adding about a 3% increase to all of their devices. Very interesting, Ting. Very interesting. Trying out a few pricing models to see how consumers will react to the increases, eh?

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  • Trenton,

    I am sure that what you are seeing has been given the term inflation. As costs increase, prices also must increase to maintain adequate profit.

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  • You got it Trenton. Just a bit more testing to find the right balance between recovering costs on the devices (and shipping and some new packaging we're adding and quite a lot of support on activation) and getting new customers. At some point, I'm pretty sure you'll find yourself in a group that's seeing lower prices too! Someone in this thread had actually suggested testing % increases and decreases rather a flat $ amount. You're exactly right that we're playing with 3% on this one. Now, shhh. It's not much of a test if everyone knows about it.

    By the way, if you or anyone else had been planning on buying something and saw the price jump, we're happy to honor the original price. We should be able to get plenty of clean data with people who are just coming to the Device page for the first time.

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  • Michael, I'm glad I found this thread.  I had planned on waiting until 02/01 to buy my devices, but then saw the increases.  I was especially bummed when I saw one of the devices I planned on buying (used Epic 4G Touch), had jumped $20+.  Are the devices on the used market included in your testing or is that beyond your control?  I had planned to buy through the used marketplace, but with the price increase I am now wondering if I should find one through another market.  I am willing to pay a little extra for the comfort of getting the device from you guys, but there is a limit to how much extra.  

    With that said, I can't wait to join the Ting family.  You guys are awesome.  The fact that this conversation is actually taking place is very impressive, and worth something.

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  • Clay, thanks for the kind words.

    We do not control the prices on Glyde (the used market). Those will remain the same. It's a good, inexpensive option. But if you want something new from us and the price has changed, just call up Support and say, "Hey, the price changed! Michael Goldstein sucks!." They're prepared to give you the original price.

    Again, I worry a bit that my little price test gets screwed up if I'm talking to everyone about it and offering credits. But I think it's a safe bet that most of the world isn't following this thread.

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