In a cash-based economy, people tend to negotiate when it comes to all sorts of purchases as they go through their daily routines. Part of this is obviously due to culture and a history of bartering, but it seems like that the need to part with actual physical currency might play a psychological role as well. If you are paid in physical currency for your labor, that represents tangible evidence of your effort and parting with currency demands receiving value – for every single transaction. Our modern system of relying on electronic payments for an increasing share of our day-to-day spending and almost all of our large recurring expenses tends to dull the linkage between earning money and spending it.
Of course, whether we make a payment in cash or use a credit card or other form of electronic payment makes no difference when it comes to our long term purchasing power. We are still ultimately constrained in our consumption based on the financial resources we have access to and we still need to focus on obtaining value for each and every purchase. For a surprising number of transactions, we should avoid the tendency to believe that pricing is “fixed” and look for ways to save money through negotiation. Furthermore, it is actually relatively easy to negotiate with large businesses which might seem a little counterintuitive.
Cutting a Deal with Comcast
There are very few companies that are as infuriating to deal with as providers of cable television, internet, and phone services. Most people have only a couple of viable choices and the service is viewed as non-discretionary. My personal opinion is that television and landline service is completely discretionary but having access to reliable high speed internet is mandatory. I view high speed internet as being on par with having electricity and water in my home. I do not own a television and do not have a landline. This “cord cutting” is possible, in large part, due to the ability to have fast and reliable internet connectivity on demand.
Over the past several years, I have routinely switched between Comcast’s Xfinity and Verizon’s Fios services. It has been possible to obtain reasonably high speed internet service for under $50 by subscribing to introductory plans, usually with a one year discounted period. After that one year, the price of service usually goes up dramatically and I simply switch back to the other carrier. However, these companies do not make it easy to switch. You cannot cancel online and have to endure long wait times and amateurish sales pitches intended to retain your business. It can take an hour or more to make the switch each year.
In February 2016, I switched to Comcast at a rate of $34.99 for their “Performance Internet” package which normally cost around $60 based on my recollection of pricing at the time. This plan recently expired and Comcast tried to charge me $74.95 for next month’s service which is far more than the $60 that prevailed last year and, in my opinion, a ridiculous amount to pay for internet service. I looked into switching to Fios but there were no good discounted plans available in my area. As a result, I logged into the Comcast site to examine my options.
Bundles and Price Transparency
The first thing I noticed was that Comcast tries to direct people toward their Triple Play package which includes internet, television, and a land line. There’s an absolutely dizzying array of choices and the first three (of many more) are shown below (the prices are regional so they might differ in your area):
One of the key features of Comcast’s pricing is that they make it as confusing as possible to compare apples to apples. You have all kinds of variables shifting around, such as the number of channels, the speed of the internet service, and various extras that are included. The names of the plans are confusing and make it nearly impossible to compare the value between plans. There is also different pricing for agreeing to a two year contract versus having no term agreement.
The confusion is intentional, as is the attempt to direct people to bundled packages where they cannot clearly see how much they are paying for each distinct service. I have no desire to have television or land line service, so I hunted around the site to find the current pricing on internet-only plans:
I use the internet for my work which requires the ability to easily download documents and to manage various activities that are cloud based, but I rarely watch videos or stream other content. As a result, I decided that I would just switch to the “Performance Starter” plan for $49.95 per month. It is more than the $34.95 I am currently paying but since Fios doesn’t seem to have cheaper options, I thought it made the most sense to just switch to the $49.95 plan. Of course, I couldn’t do this easily on the website so I had to call customer service.
No WiFi? Are you kidding me? This is 2017!
After about 20 minute going through endless automated menus, I finally reached a representative who tried to talk me into keeping the $74.95 plan. Finally, she agreed to switch me to the $49.95 plan, but there was a catch: That plan only allows customers to connect one device at a time. And there’s more: You have to use an Ethernet cable to connect that device!
That’s right: Comcast’s entry level internet plan does not allow customers to connect a WiFi router and use devices like smart phones, tablets, or modern laptops. They want you to use a wired connection.
It has nothing to do with bandwidth. Comcast is providing a certain level of bandwidth and it doesn’t cost them any more to allow customers to use WiFi. The reason is to make the plan unattractive and unusable, thereby pushing customers toward more expensive options.
Now, at this point, most people would probably resign themselves to just paying the $74.95 per month, ending the endless phone call, and getting on with their lives. But I was angry because I knew what Comcast was trying to do. They force customers to endure a long, frustrating phone call. They attempt to use text book sales tactics to get customers to buy more than what they want. And then they finally “agree” to switch me to the plan I wanted, but then tell me that it is essentially unusable. So, I was quite angry by this point.
I threatened to simply cancel service.
This wasn’t really a bluff because I could have switched to Fios for around $60 per month. It would have still been cheaper than the $75 Comcast was asking for, although it would have been a hassle.
So, what happened? I was transferred to a “customer retention” representative who immediately offered to discount the $74.95 plan to $59.95 for another year. I immediately said no. I was then put on hold for another five minutes. The representative came back and said that he was sorry but that was the best Comcast could do. I again told him to cancel my service. After another hold, he came back and offered $49.95 which I agreed to.
Almost Everything is Negotiable
Big companies like Comcast that operate in industries where customers have few choices thrive on making their pricing as confusing as possible, offering decent deals for a limited period of time, and then hoping that customers simply continue to pay the higher price due to inertia and the fact that automated billing makes it easy to do nothing. However, the marginal cost of providing internet service to an existing customer is low and retention of customers is very important. These companies do not want to lose your business. They make it difficult and frustrating to cancel but, if pushed, will often provide much better deals than advertised on the website.
It is true that I spent about an hour in a state of extreme frustration with the entire process, but the result was saving $300 over the next year compared to the “auto-pilot” option of doing nothing. $300 is a significant amount of money, and compound interest will make it even more significant when saved or invested for the future. My time is valuable, but I’m still willing to trade an hour to save $300, and I think almost all readers probably would feel the same way.
The way Comcast and similar companies treat customers is infuriating but they are selling internet services that, in my view, are not discretionary. We have much more competition in wireless phone and internet service than we do for home internet service and companies like Republic Wireless make it extremely simple and transparent to purchase service for a very reasonable cost. It would be great if we could have cheap, wireless service intended for more intensive home use. Until that happens, it is necessary to negotiate. It is unfortunate that few people even realize that companies like Comcast will move on pricing when they are pushed to do so.