Author Topic: Verizon Edge Plan: What's the catch?  (Read 5033 times)

frugalnacho

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Verizon Edge Plan: What's the catch?
« on: June 02, 2015, 10:39:31 AM »
My wife has an iphone 4 and bitches about it constantly (always freezing, needs to be upgraded), but for some reason is enamored with apple and refuses to consider anything other than an iphone 6.  She also refuses to consider any service other than verizon, because she's on a family plan with her parents and likes the call quality.  No amount of reason or math can get through to her, so it is what it is.

I just got a call from her, she was at the verizon store with the sales rep.  She wants to upgrade to the iphone 6, and here is how it works:

$660 for the phone, spread out evenly over 24 payments of $27.50 each.   
$25/mo discount applied to the account for those 24 months, making the net cost to the account $2.50.
No contract, if you want to change provider you just pay off the remaining balance on the phone, but then you own it and resell it if you like.

She put me on with the rep and he explained it to me.  I asked what the catch was, and he claims there is no catch.

So how does verizon hand out iphone 6s and only charge $2.50/mo?  How could they possibly be making money on this deal?  And even if they are swimming in so much profit from the service why are they willingly subsidizing the new phones? 

I am suspicious that there is something being overlooked that is going to change the overall bill substantially more than $2.50/mo.  Or that there is some other hidden caveat I have not thought of because i've only been dwelling on it for about 20 minutes.

neo von retorch

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Re: Verizon Edge Plan: What's the catch?
« Reply #1 on: June 02, 2015, 10:51:42 AM »
How much is the bill itself... ?

Comparing Verizon to T-Mobile and the MVNO plans, you tend to be spending $20-50 more per month (usually the high end.) At $50/month more (before things like Edge plans), they are making $1200 every two years... suddenly those $660 phones don't seem like such a great deal.

frugalnacho

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Re: Verizon Edge Plan: What's the catch?
« Reply #2 on: June 02, 2015, 10:59:42 AM »
How much is the bill itself... ?

Comparing Verizon to T-Mobile and the MVNO plans, you tend to be spending $20-50 more per month (usually the high end.) At $50/month more (before things like Edge plans), they are making $1200 every two years... suddenly those $660 phones don't seem like such a great deal.

I have no idea.  It's in her dad's name and there are 4 people on it total.  She pays her parents $40/mo for her share.  Allegedly the total bill is only going up $2.50/mo in total.

Daley

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Re: Verizon Edge Plan: What's the catch?
« Reply #3 on: June 02, 2015, 12:57:37 PM »
Frug, any subsidy contract by any other name is still a subsidy contract. Verizon's just playing with the numbers and language to hide the fact that it works exactly the same way as it always has.

frugalnacho

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Re: Verizon Edge Plan: What's the catch?
« Reply #4 on: June 02, 2015, 01:10:17 PM »
Frug, any subsidy contract by any other name is still a subsidy contract. Verizon's just playing with the numbers and language to hide the fact that it works exactly the same way as it always has.

Yea I get that.  But they only offer the discount when you "buy" the phone on the edge plan.  If you opt to continue using your old phone you don't get a discount.  So the options are:

1. Keep old phone, pay inflated verizon rates.
2. get new iphone 6, pay inflated verizon rates plus $2.50/mo.

It seems like option 1 would be significantly more profitable for verizon.  It would be great if you could just buy your own phone and not play verizon's games and pay a much cheaper rate. 

Daley

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Re: Verizon Edge Plan: What's the catch?
« Reply #5 on: June 02, 2015, 01:25:15 PM »
Number two is technically more profitable long term because they've guaranteed revenue by effectively locking people into a two year contract. The service is grossly overpriced and equally charged at a premium no matter what, but if anyone who ropes in and either leaves or needs another phone before the two years is up (which is statistically pretty common now), you still paid more per month on the bill than you would without another handset and they still recover their remaining subsidy balance on the phone... only now, instead of an average flat rate for smartphones, the ETF is the specific remaining amount for the make and model phone itself. They keep the non-subsidized price so high to easier entice people to go into debt and under contract. Also, don't forget that the carriers don't pay anything near full retail price they sell it to you for, either.

It's always operated like this. If option two actually cost more money than made, none of the major carriers would have structured their business on this model to begin with.

The reason why you're not seeing the catch is because it's the same obvious catch as it always is, but even higher priced than in the past. It's designed to guarantee revenue long term and the catch is the same as it always is, if you want to leave or need to replace your handset before the 24 month mark, they get their pound of flesh out of you.

hdatontodo

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Re: Verizon Edge Plan: What's the catch?
« Reply #6 on: June 02, 2015, 02:31:04 PM »
http://www.verizonwireless.com/landingpages/edge/

I had heard there were some recent changes to simplify things.

willkp23

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Re: Verizon Edge Plan: What's the catch?
« Reply #7 on: June 02, 2015, 04:57:52 PM »
Frug, any subsidy contract by any other name is still a subsidy contract. Verizon's just playing with the numbers and language to hide the fact that it works exactly the same way as it always has.

^
This.   I deal with Verizon all the time and the Edge plan is the most expense.   One thing to factor in is they keep your phone when you upgrade, you don't own it.   I think it only works out when you upgrade at the soonest available time.   Think of it this way, if they are advertising it all of the time, do you really think its a good deal for you?

frugalnacho

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Re: Verizon Edge Plan: What's the catch?
« Reply #8 on: June 02, 2015, 06:33:58 PM »
Frug, any subsidy contract by any other name is still a subsidy contract. Verizon's just playing with the numbers and language to hide the fact that it works exactly the same way as it always has.

^
This.   I deal with Verizon all the time and the Edge plan is the most expense.   One thing to factor in is they keep your phone when you upgrade, you don't own it.   I think it only works out when you upgrade at the soonest available time.   Think of it this way, if they are advertising it all of the time, do you really think its a good deal for you?

No, hence my suspicion. 

Why would anyone trade it in to upgrade if you lose all the equity you have in the phone? Why not just buy it out, resell it, and do another edge plan on the next greatest phone?  Or does it depreciate as fast as it gets paid?  Verizon is "charging" $660 for the phone though, that seems crazy it could depreciate to nothing after 2 years.

I have no idea where my wife is.  She may be at the verizon store as we speak. 

Blonde Lawyer

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Re: Verizon Edge Plan: What's the catch?
« Reply #9 on: June 02, 2015, 07:26:28 PM »
My two cents is that both parties in a marriage need some financial freedom.  It sounds like your wife is seeking your permission to enter into this transaction which she shouldn't need.  While I think all major purchases need to be discussed, she's already on the $40/month plan w/ her parents.  I say you let her make the decision and support whatever choice she makes.  If this was going to truly impact your finances we might be having a different conversation here.  Consider it a $3/month investment in your marriage.  If she's otherwise mustachian, you've already won.

Workinghard

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Re: Verizon Edge Plan: What's the catch?
« Reply #10 on: June 03, 2015, 03:48:04 AM »
I needed a new smart phone and recently went to Cricket. I was thrilled to get an unlocked phone for ~$50 plus case and memory card. The thought of spending $600 for an iPhone makes me sick especially when they have to be upgraded (due to problems in my case) every couple years.

Having said that, my dh wants to stick with Apple so he can synch with his iPod and iPad. At least he'll get an unlocked phone, go to Cricket, and we might be able to get something for our old phones- tho I'm not seeing much on the Internet. Oh, and he's paying for it with his OT income which is not included in our budget.  Makes it a little more palatable for me.:)

Scandium

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Re: Verizon Edge Plan: What's the catch?
« Reply #11 on: June 03, 2015, 04:39:51 AM »
I thought this was on the Edge network, which seemed kinda insane.. Stupid brand mixing

2Birds1Stone

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Re: Verizon Edge Plan: What's the catch?
« Reply #12 on: June 03, 2015, 02:19:22 PM »
Also, with Verizon phones being non sim. How does selling it work?

hdatontodo

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Re: Verizon Edge Plan: What's the catch?
« Reply #13 on: June 04, 2015, 09:02:04 AM »
Also, with Verizon phones being non sim. How does selling it work?

I have bought several VZ Samsung 4G phones from eBay and swapped in a current VZ red/white SIM card.
« Last Edit: June 05, 2015, 06:29:48 PM by hdatontodo »

cparlette

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Re: Verizon Edge Plan: What's the catch?
« Reply #14 on: June 04, 2015, 03:32:52 PM »
Frug, any subsidy contract by any other name is still a subsidy contract. Verizon's just playing with the numbers and language to hide the fact that it works exactly the same way as it always has.

^
This.   I deal with Verizon all the time and the Edge plan is the most expense.   One thing to factor in is they keep your phone when you upgrade, you don't own it.   I think it only works out when you upgrade at the soonest available time.   Think of it this way, if they are advertising it all of the time, do you really think its a good deal for you?

No, hence my suspicion. 

Why would anyone trade it in to upgrade if you lose all the equity you have in the phone? Why not just buy it out, resell it, and do another edge plan on the next greatest phone?  Or does it depreciate as fast as it gets paid?  Verizon is "charging" $660 for the phone though, that seems crazy it could depreciate to nothing after 2 years.

I have no idea where my wife is.  She may be at the verizon store as we speak.

You only lose the equity in the phone if you upgrade early.  If you stay on the same phone for 24 months, you own the phone, but if you upgrade after 18 months then you lose the equity.