Phone credit surcharge

blackbelt

Not too sure if there is/was a thread on this but whats the deal with a "service charge" on top of phone credit?Wow,are some people expected to pay extra for the person pressing a few buttons?

Could this not be deemed as touting ie selling a product/service above its face value.Afterall,if you buy 10 euro credit why are some customers expected to buy 10 euro worth for 10.50.I've noticed this in the city centre particularly.

Surely Comreg or the Minister for Communication should put an end to this?

Beano

is it not the phone companies themselves that increased the price paid by shops? Some shops just decided to pass the increase on to their customers instead of taking a cut in profits. Simple answer is to buy inplaces that only charge face value.

January

It's a product that stores sell, so they charge a surcharge to cover their overheards. Some shops don't do this. Buy from them if it bothers you.

Cabaal

Nothing to do with the phone companys, just greeding shops
Vote with your feet and get credit from shops that don't charge extra for a top-up, or just use a ATM or on-line banking top-up

mcaul

Cabaal wrote: »

Nothing to do with the phone companys, just greeding shops
Vote with your feet and get credit from shops that don't charge extra for a top-up, or just use a ATM or on-line banking top-up

If I were still in retail, i wouldn't do these top ups as they are no longer profitable in any way for retailers.

Banks charge .5% for cash lodgements, Laser costs 20c per transaction & credit cards cost 2.5% of transaction.

Phoine companies give retailers 5% handling fee (reduced about 2 years ago from 7.5%) Rent, Rates, Sevice Charges, Staff, ESB etc etc... - Easy to see no profit unless you are doing large volume.

Spud83

Phone companies used to give a commision to shops based on the amount of credit the sold. However the stopped this once they realisied that the need to pay the shops. So some shops added a surcharge to the phone credit so the could continue making there money, while some didn't. The ones that didn't where happy with the extra people it would bring into their shop and maybe buy something and happy to keep providing the service, the ones that added the surcharge a greedy and dont deserve anyones custom.

chrislad

I don't see how it qualifies as greedy. They wanted to keep earning the same level of cash that they were. No one likes getting a pay cut.

Gillo

chrislad wrote: »

I don't see how it qualifies as greedy. They wanted to keep earning the same level of cash that they were. No one likes getting a pay cut.

Very true. And as it's been said there are plenty of places that do not charge a surcharge.

Colonel Sanders

mcaul wrote: »

..they are no longer profitable in any way for retailers.

then exit the market, don't rip the customer off. Most places I have seen surcharges charged are in overpriced small shops. they are already blatantly ripping people off in other areas so on the assumption that the average customer will not JUST buy his/her phone credit a cross subsidy will apply. If shops feel the phone compnaies are ripping them off they should think of that when they have the cheek to charge 95c for a bag of crisps (as one newsagent tried to charge me not so long ago).

I work in insurance, there are certain sectors of the market the company I work doesn't feel we can make money in, we don't sell products in these sectors.

FindingNemo

mcaul wrote: »

If I were still in retail, i wouldn't do these top ups as they are no longer profitable in any way for retailers.

Banks charge .5% for cash lodgements, Laser costs 20c per transaction & credit cards cost 2.5% of transaction.

Phoine companies give retailers 5% handling fee (reduced about 2 years ago from 7.5%) Rent, Rates, Sevice Charges, Staff, ESB etc etc... - Easy to see no profit unless you are doing large volume.

This is true but it still brings customers into the shops,
and the majority of people won't JUST get phone credit, they'd get bars/lotto/paper/cigs etc etc.

Padraig Mor

mcaul wrote: »

Phoine companies give retailers 5% handling fee .

Virtually all of which they keep as net profit as it costs them SFA to provide the service.

This whole practice arose several years ago when one of the companies dropped the commission on credit. Shops then added a surcharge to make up the difference. However, in most cases the surcharge was greater than the shortfall in commission. Robbing bastards.

ScouseMouse

Cabaal wrote: »

Nothing to do with the phone companys, just greeding shops
Vote with your feet and get credit from shops that don't charge extra for a top-up, or just use a ATM or on-line banking top-up

Listen Cabaal, greedy shops as you describe is wrong. Vodafone started it by increasing the price of a 10 euro topup to the shops by about 40c. So its costs went from 9.00 to 9.40. The rest went up be ABOUT the same margin. I dont have the exact figures so dont argue over a cent or two. Some shops - including my own - passed this on to the customers. It is unreasonable of you to call me greedy when all I am doing is maintaining the status quo. The person getting the extra profit is vodafone. This amounts to a pay cut for the shops so vodafone can feck off. Anyone thats wants to complain in my shop is given the vodafone phone number. We didnt start this.

It is true that if you dont like it, go elsewhere, but where can the shop go?

An alternative supplier? Vodafone is Vodafone !!

dudara

Take it easy everyone, there's no need for a slanging match here.

tippbhoy

Padraig Mor wrote: »

Virtually all of which they keep as net profit as it costs them SFA to provide the service.

This whole practice arose several years ago when one of the companies dropped the commission on credit. Shops then added a surcharge to make up the difference. However, in most cases the surcharge was greater than the shortfall in commission. Robbing bastards.

Who pays for the phone line rental? Who pays for the terminal purchase or rental, who pays for the staff to hand out the product. Who pays for the rates to have a shop there to provide the service

I don't see how this is SFA of a cost. The reality of this is the store provide a service for a price they see fit. If you are not happy with the price you do not pay it and you go elsewhere. The is the premise of competition on which our entire economy is founded on. Some people on here expect something for nothing or very little even when they couldn't be bothered going elsewhere. Law of supply and demand, we're fueling the rip off culture ourselves.

For the record, I wouldn't pay it, i use online banking. If nobody payed for it they wouldn't continue to charge it. Convenience is the service and people are accepting it, it's not like this is a monopoly situation. Basic economics.

Colonel Sanders

tippbhoy wrote: »

If you are not happy with the price you do not pay it and you go elsewhere.

likewise if you are not happy with the commission withdraw the product from your shop.

Padraig Mor

tippbhoy wrote: »

Who pays for the phone line rental?

Presumably the shop is paying for phone line rental anyway?

tippbhoy wrote: »

Who pays for the terminal purchase or rental

The phone company IIRC

tippbhoy wrote: »

who pays for the staff to hand out the product.

The staff will be paid to be there anyway

tippbhoy wrote: »

Who pays for the rates to have a shop there to provide the service

They'll be paying rates regardless of whether they sell credit or not.

Listen, if shops wanted to raise their prices to make up the shortfall, so be it. Raising prices even further (as most seem to have done), to *increase* their profit, is just gouging.

Sam Vimes

alanmurphy83 wrote: »

Phone companies used to give a commision to shops based on the amount of credit the sold. However the stopped this once they realisied that the need to pay the shops. So some shops added a surcharge to the phone credit so the could continue making there money, while some didn't. The ones that didn't where happy with the extra people it would bring into their shop and maybe buy something and happy to keep providing the service, the ones that added the surcharge a greedy and dont deserve anyones custom.

say a wholesaler sells a shop a bottle of coke for 80c and the shop charges a euro. this is business.

if the wholesaler then increases the wholesale price to 90c, is the shop greedy by increasing their price by the same amount?


credit is a product like any other and shops are not obliged to sell it at a loss (when staff and electricity costs are taken into account) because the networks increased the price. if anybody is greedy here its the networks for decreasing the commission given to the shops.


having said that, i would never buy a top up from a shop that charged the surcharge. i do text top up

ScouseMouse

Commander Vimes

I compliment you on some common sense in what you said. When I saw what Cabaal posted about shops being greedy, I saw red. He obviously doesnt know what he is talking about on this issue and I had to put the record straight. However, is it appropriate for some who is obviously opinionated to be a moderator on boards !!!!

chrislad

Tsch, he just make a longer post on my point

tippbhoy

Padraig Mor wrote: »

Presumably the shop is paying for phone line rental anyway?

The phone company IIRC

The staff will be paid to be there anyway

They'll be paying rates regardless of whether they sell credit or not.

Listen, if shops wanted to raise their prices to make up the shortfall, so be it. Raising prices even further (as most seem to have done), to *increase* their profit, is just gouging.

the shop will often have a dedicated line to this, they cannot expect to provide a service when someone is on the phone in the office. That's at least 250 quid a year for 1 line.

The phone company do not pay for the terminal in many instances, why do you think some stores only have 1 terminal even if it makes sense to have one on each till.

Regarding the points that they are paying the fixed costs anyway, it is pointless having a discussion on it if this is the best you can muster to strengthen your argument. While we're at it why aren't sandwiches cheaper, the staff would be there anyway twiddling their thumbs and would be only delighted to pass the time :rolleyes:

Tails142

Colonel Sanders wrote: »

then exit the market, don't rip the customer off. Most places I have seen surcharges charged are in overpriced small shops. they are already blatantly ripping people off in other areas so on the assumption that the average customer will not JUST buy his/her phone credit a cross subsidy will apply. If shops feel the phone compnaies are ripping them off they should think of that when they have the cheek to charge 95c for a bag of crisps (as one newsagent tried to charge me not so long ago).

I work in insurance, there are certain sectors of the market the company I work doesn't feel we can make money in, we don't sell products in these sectors.

oh please!! someone in the insurance industry preaching about ripping customers off. They must have learnt all their tricks from your industry... lol

Excuse my while I life my ass off at the irony....

tippbhoy

Colonel Sanders wrote: »

likewise if you are not happy with the commission withdraw the product from your shop.

this is an alternative option of course, however it is then one less service that would be available to the consumer so either way the retailer will lose on this one unless the margin is corrected via a surcharge.

I'll repeat i think this was an unwise move on the part of some retailers due to the adverse publicity it has generated. For some to call them greedy is unfair, you'd swear people didn't have a choice.

Padraig Mor

tippbhoy wrote: »

it is pointless having a discussion on it if this is the best you can muster to strengthen your argument. :

Nope the best I could muster was "Listen, if shops wanted to raise their prices to make up the shortfall, so be it. Raising prices even further (as most seem to have done), to *increase* their profit, is just gouging.". You've conveniently ignored this twice now. You presumably agree with blatant price gouging so?

ScouseMouse

But we are not increasing our profit - we are just staying as we always were !!!!

Padraig Mor

superscouse wrote: »

But we are not increasing our profit - we are just staying as we always were !!!!

Maybe you are. But there's plenty of reports of shops who are not.

Noelie

Shops actually loose money seeling the top-up. for a shop to cover costs they need to be making an average of about 20% profit. this is to cover staff costs bill rent and cost of the product.
Groceries will average about 30-35% while top-up, cigerettes, lotto and bus tickets all make about 5-7%.

The shop is providing a service which is not making it money but sells the products to entice the costumer into the shop. It actually takes more resources to sell the top-up than it does to sell the more profitable groceries.

The way the phone companies see it is that they can sell their credit online or at ATM's, where there is very little operating costs so the service providers i.e. the banks, are happy to make an extra 7%. they then decided why should the give the retailer 10% so each shop was told the commision was going down like it or lump it.

There would be more up roar if the shops didn't sell the credit as people would be saving they don't have access to the net or an ATM. so it's a lose lose situation for shops.

tippbhoy

Padraig Mor wrote: »

Nope the best I could muster was "Listen, if shops wanted to raise their prices to make up the shortfall, so be it. Raising prices even further (as most seem to have done), to *increase* their profit, is just gouging.". You've conveniently ignored this twice now. You presumably agree with blatant price gouging so?

This is all relative, they may maintain the same margin percent but at the same time make more margin. In other words they now make more money in monetary terms but the percentage return from the outlay is the same.

The store has made more money but this is the case for any price increase that takes effect on any product in the store and rightly so as they have a higher outlay hence a higher risk. Is this "increasing" the profit... the term profit can be very ambiguous, in monetary terms yes, in more relative terms no.

No i do not agree that it is "gouging". I think it was an ill advised move due to the type of product and adverse reaction from the public but it is justifiable, the average consumer would not relate credit to any other product when there is in fact absolutely no difference.The simple reason i wouldn't pay it is because i can get it cheaper elsewhere doh!

if a store sells a mars bar for 80c and another for 75c, is the first one ripping off the customer and is greedy. The immediate answer is yes, the more infomed answer would be possibly yes or no as there are many factors to be considered.

Colonel Sanders

Tails142 wrote: »

oh please!! someone in the insurance industry preaching about ripping customers off. They must have learnt all their tricks from your industry... lol

Excuse my while I life my ass off at the irony....

irony? why. Proof of rip offs please?

and I'd like PROOF, not hearsay and speculation. there is no way the insurance industry can be accused of making excessive profits. Look at return on capital figures over the last 5-6 years. They are in no way out of line with other industries and lag behind many.

tippbhoy

tippbhoy wrote: »

This is all relative, they may maintain the same margin percent but at the same time make more margin. In other words they now make more money in monetary terms but the percentage return from the outlay is the same.

The store has made more money but this is the case for any price increase that takes effect on any product in the store and rightly so as they have a higher outlay hence a higher risk. Is this "increasing" the profit... the term profit can be very ambiguous, in monetary terms yes, in more relative terms no.

No i do not agree that it is "gouging". I think it was an ill advised move due to the type of product and adverse reaction from the public but it is justifiable, the average consumer would not relate credit to any other product when there is in fact absolutely no difference.The simple reason i wouldn't pay it is because i can get it cheaper elsewhere doh!

if a store sells a mars bar for 80c and another for 75c, is the first one ripping off the customer and is greedy. The immediate answer is yes, the more infomed answer would be possibly yes or no as there are many factors to be considered.

Just to re-iterate my point, someone correct my maths if necessary but i think this is about correct. I'll use the term widgets as usual.

Product A
Cost -1.00
Sell - 1.20
Profit margin - 20

Profit Margin %
(1.20-1.00)/120 * 100/1 = 16.67 % margin

Product A increases in cost by 5c
Cost 1.05
Sell 1.28
Margin - 23

Profit Margin %
(1.26-1.05)/1.26 * 100/1 = 16.67 % margin


In notional terms i am no better off

MOH

tippbhoy wrote: »

Just to re-iterate my point, someone correct my maths if necessary but i think this is about correct. I'll use the term widgets as usual.

Product A
Cost -1.00
Sell - 1.20
Profit margin - 20

Profit Margin %
(1.20-1.00)/120 * 100/1 = 16.67 % margin

Product A increases in cost by 5c
Cost 1.05
Sell 1.28
Margin - 23

Profit Margin %
(1.26-1.05)/1.26 * 100/1 = 16.67 % margin


In notional terms i am no better off

Think you moved the goalposts a bit there

ScouseMouse

No, I dont think he did. He calculated the margin as of the selling price rather than the cost price. It is obvious he is in the trade as this is the proper way to calculate the margin. What shops do is calculate the profit against takings.