Is the best price always the best deal?

April 16, 2018

Imagine going into a car salesroom and saying: ‘I want a car, what is your best price?’

 

You’d expect the sales person to start asking questions about what you’d be using the car for, the style, finishes, colour, what was more important to you – speed or economy, petrol or electric and possibly even your budget.

The one thing they would not do is just quote a price. And would you really want them to, without understanding what you will get for your money?

Yet it is now becoming more common for businesses just to ask for prices for telecoms – be it lines, broadband, mobiles or VoIP. We regularly see requests on LinkedIn asking for someone to ‘quote me for VoIP’ and then being surprised when people ask questions before quoting.

In the same way that not all cars are the same – neither are all telecoms solutions. They are not commodities, despite the way some suppliers market them.

I am not suggesting that you pay over the odds, rather trying to help businesses ask the right questions to ensure they are making apples vs apples comparisons, i.e. comparing like for like, and also not paying for services they don’t need, or getting trapped in long contracts that may appear cheaper to start with but over the long term are painfully expensive.

Let’s look at each option individually:

 

Broadband

There is no coincidence that suppliers offering the very cheap broadband prices often top Ofcom’s most complained about providers. It costs a certain amount to run a decent Internet network. People making a decision purely on the monthly cost should ask the following questions:

 

  1. What is the contention ratio of the line – i.e. how many are sharing it?
  2. How many network outages have you had in past 12 months?
  3. What router is supplied? There have been regular incidents of cheaper routers being hacked or compromised. If someone is charging £10 a month for broadband and giving you a free router it won’t be worth much
  4. What is average wait time when calling for support?
  5. What is average fix time for faults?
  6. What network is it on? This is important if you want to change providers at a later date. We see a number of suppliers moving services from BT to Talk Talk without telling the customer. It can be quite hard to move back. There is more choice of suppliers if you are on BT.

 

The main question, however, is to ask yourself what a day without internet would cost you, and does this provider increase the risk?  We saw a pub that went for cheaper broadband which then went down on a Friday and was not fixed until the Monday. Over a busy weekend they lost sales of over £6,000 they could use their card machines without the Internet.

 

Line Rental

There are several telecoms companies that advertise themselves as ‘never beaten on price’ – they can’t all be right unless they are operating as a cartel.   Frequently the claim links only to line rentals or calls to a specific destination.   We have seen lines being sold at below the wholesale price, so, short of wanting to go out of business quickly the supplier will be clawing it back elsewhere.  So be wary and check the points above, plus check the following:

 

  1. The price is fixed for duration of the contract
  2. No set up fees or minimum charges on calls – in the last few weeks we have seen a hotel in Norfolk and a care home in Lancashire being charged 26p set up fee on each and every call
  3. Calls rounded up to the nearest minute – this can add 25% to the overall cost of calls
  4. Prices to destinations you call regularly – are they competitive?
  5. Taking up a “special promotion” – a London charity was being offered free intra-site calls. However they were then charged five-times the market price for all their other UK landline calls.

 

Mobile phones

With mobiles the obvious thing to check is coverage for your location.  There is no point signing a cheap deal if there is no signal at your office/business location.  You should not rely on the networks checking either.  We saw a company where the head office had coverage but their two regional offices didn’t – but the network still happily signed them up.   It is not just office locations – check key staff home addresses as well if you are changing networks.

A deal might appear to be significantly cheaper than others because the offer includes unlimited calls and lots of data.  On the face of it this may seem appealing but like many companies you may find you don’t really need this.   Around 33% of mobile users no longer make any voice calls.   The average business person uses well under 2GB of data each month.  One customer we reviewed found that 10% of their 1,000 phones had not been used at all in a year.  So, check what you actually need before asking for prices – not just who can do the best deal on unlimited data.

If you aren’t taking a SIM only deal you need to look out for inflated hardware funds.  The funds can look impressive but we’ve seen deals where a company has found that the cost of the handsets provided was inflated to 25-35% above normal prices.  If you are going for a hardware fund ask for a hardware price list at the same time and check it carefully before you sign a deal.

 

Voice over Internet (VOIP)

VOIP is often the option that businesses understand least. As a result there are more risks of misunderstanding offers.  It is the one that is closest to the car analogy as each businesses’ telecoms requirements are different.   You may find that handsets and calls and bundled into their prices – others include features that a different provided charges for separately.  So, things to consider before asking for a price are:

 

  1. What features do I need today and may I want in the next few years?
  2. What is the ability of the company to develop new features? There are lots of self-built VoIP solutions out there where the development and support is dependent on only a few individuals.  The advantage is that specific features can be added more quickly than the big platforms, but then there is the risk associated with what happens if they leave
  3. What handsets are you being offered? Are the handsets from a brand used by other VoIP companies should you wish to change supplier or are they locked into your supplier? If included in the price, will you own them when your contract ends?
  4. What are the out of call bundle charges (if bundles are offered)? Do your call volumes justify bundles?   If the business is predominantly inbound then packages without calls may be better overall.
  5. What business continuity is in place if the host system falls over? Asking for uptime statistics over the past 12 months is a good idea
  6. If you are a small business with fewer than 10 employees, is your supplier signed up to the ombudsman? If not – why not?
  7. Ask about contract length and support statistics (as per advice above)

 

And of course, be very sceptical if you are offered a phone system apparently for nothing.  These are almost always long lease hire deals in disguise.  They are frequently dodgy and should not be touched with a barge pole.

In summary, it is important to ensure you are getting a good deal. However what may appear initially a good deal may turn out to have additional, unexpected costs.  “Other charges” can far outweigh apparent savings.

What is crucial is getting the quality of service you need for your business. If it’s not good enough there could be a negative impact on your bottom line.  So weigh up your options carefully to get what is truly the best deal for you.

 

About the author

Dave MilletDave Millett has more than 35 years’ experience in the Telecoms Industry.  He has worked in European Director roles for several global companies.  He now runs Equinox, a leading independent brokerage and consultancy firm. He works with many companies, charities and other organisations and has helped them achieve savings of up to 80%.  He also regularly advises telecom suppliers on improving their products and propositions. www.equinoxcomms.co.uk

 

Twitter: @equinoxcomms

LinkedIn: http://www.linkedin.com/pub/dave-millett/2/17b/a94

 

 

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