Who wants a free phone?

BEGINNER'S GUIDE TO MOBILE PHONES

It might sound a trite question - but who wants a free phone?

If it is free there is ALWAYS a catch.

But what if you knew exactly what that catch was, and how you could make it work in your favour?

So why are mobile phones free?

Well, really they are not free. The mobile phone dealer has to buy in the phone at cost price. This can be from £30 to £500+. All the half-decent phones are £200 and more.

So why would the mobile phone dealer give the phone away? Are they making a loss?

Mobile phones are only free when they are connected on a 'pay-monthly' or'line rental' contract. This is the opposite of 'pre-pay' or 'pay as you go' phones (PAYG). With pay as you go phones you simply buy phone credit top up (eg £10, £20 credit) in a shop and add that to your phone. This means that you can only use the phone for as long as there is credit on the phone. No credit - no phone call.

With a pay-monthly (line rental) mobile phone you use the phone as much as you want, then simply pay for your calls by a monthly bill.

Think about this ... Which do you think the mobile phone networks prefer - a customer on pre-pay or a customer on pay-monthly contract?

The mobile phone networks prefer the contract customer, because the contract, which is usually 12 or 18 months long, signs the customer into that contract, and they are guaranteed to get 12/18 months worth of business from that customer, and maybe more afterwards if the customer continues with them (which most do). So the network is guaranteed 12+ months of line rental, plus the cost of any additional calls that the customer might make.

This is why the networks give a big commission to the dealer when they connect a customer on a pay-monthly contract. The amount of commissio the dealer gets is proportional to the monthly line rentla the customer agrees to pay each month under the contract. The more the line rental amount, the more the dealer's commission.

This is why dealers will often talk you into getting a higher price plan, with a higher line rental.

If you agree to a basic (cheaper) phone on a high price plan, then the dealer is laughing.

Now THIS is how the dealer is then able to give you that mobile phone for free.

Maybe the phone cost him £150, but if his network commission is £400, he can give you the mobile phone for free, and still make £250 profit.

If you visit a small independent retailer, and sometimes larger chain mobile phone retailers, you can usually negotiate and haggle to get a better deal. If you don't want a high-spec 'bells and whistles' phone, but you do talk a lot on the phone (hence need a high price plan with lots of incluclive call minutes), then you know that the dealer is going to get a big fat commission cheque.

With this in mind, you should be able to either get some money back, and/or get them to throw in lots of accessories or other free gifts to go with the phone.

This is how 'cashback offers' work. The cashback is paid out of the dealers commission, to make the offer more appealing to you.

Many website, although they 'wont haggle', do already have very competitive cashback offers, which means more money to you.

For example, have a look at http://www.mobile-phone-upgrade.com (they do new contract mobile phones, not just upgrades).

You will see there that they have many free mobile phones with big cashbacks to you as the customer.

So this is how the 'free mobile phone' system works.