Phone credit surcharge

tippbhoy

MOH wrote: »

Think you moved the goalposts a bit there

Sorry you are right, i'd been playing around with the sell price in the calculation to make sure i maintained the same margin but never changed it in the example, my mistake.

the calculation is still correct however.

Product A increases in cost by 5c
Cost 1.05
Sell 1.26
Margin - 21

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

parsi

Colonel Sanders wrote: »

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.

One example would be the wide divergence in motor insurance quotes. I always ring Quinn Direct for the laugh so that I can get a >1k quote and then go to the others for a more reasonable quote. For me over the last 4-5 years the rates from high to low are: Quinn, Eagle Star, Axa & Hibernian (the latter two are usually close).

That to me is very like shops which have rip-off prices when compared to shops that charge less eg the shop that charges a whopping surcharge and the one that charges little or no surcharge.

foggy_lad

some shops in carlow are ripping people off to the tune of €22 for €20 top-up! these top-ups should be sold at face value and why is it almost impossible to get a receipt from most small shops including centras londis vivo etc etc

tippbhoy

foggy_lad wrote: »

some shops in carlow are ripping people off to the tune of €22 for €20 top-up! these top-ups should be sold at face value and why is it almost impossible to get a receipt from most small shops including centras londis vivo etc etc

you are entitled by law to get a receipt on demand. i've never come across a case of somewhere that can't produce when you ask, they can write a receipt if required.


what is face value. if you buy a ticket on ticekmaster, do you pay face value?

Sam Vimes

foggy_lad wrote: »

some shops in carlow are ripping people off to the tune of €22 for €20 top-up! these top-ups should be sold at face value and why is it almost impossible to get a receipt from most small shops including centras londis vivo etc etc

did you read the thread at all?

Colonel Sanders

parsi wrote: »

One example would be the wide divergence in motor insurance quotes. I always ring Quinn Direct for the laugh so that I can get a >1k quote and then go to the others for a more reasonable quote. For me over the last 4-5 years the rates from high to low are: Quinn, Eagle Star, Axa & Hibernian (the latter two are usually close).

That to me is very like shops which have rip-off prices when compared to shops that charge less eg the shop that charges a whopping surcharge and the one that charges little or no surcharge.

some companies quote high prices to customers in order to remove large numbers of similar risks from their books (i.e. they will not want 100 of their motor book to be drivers aged 30-35 or all their household exposure to be located in the same town). Its a means of risk management, not a means of ripping someone off.

Also different companies have different experience for the factors they rate on. For example I know Hibernian load household policies in Finglas (no idea why, I don't work for them). This would infer that they percieve Finglas as being a riskier are than the likes of allianz and axa do and charge accordingly.

tippbhoy

Colonel Sanders wrote: »

some companies quote high prices to customers in order to remove large numbers of similar risks from their books (i.e. they will not want 100 of their motor book to be drivers aged 30-35 or all their household exposure to be located in the same town). Its a means of risk management, not a means of ripping someone off.

Also different companies have different experience for the factors they rate on. For example I know Hibernian load household policies in Finglas (no idea why, I don't work for them). This would infer that they percieve Finglas as being a riskier are than the likes of allianz and axa do and charge accordingly.

well that clears that up anyway, this "factual" non subjective way of analysing risk in the insurance industry is the reason for such variations in pricing until i tell them i'm getting it cheaper elsewhere.
Never any smokescreen for making abnormal profits

Colonel Sanders

tippbhoy wrote: »

Never any smokescreen for making abnormal profits

I repeat the profits insurance companies have made even in the last few years have by no means been 'abnormal' compared to the amount of capital needed to support their balance sheets. Compare them with other industries to see that.

People seem to forget that insurance companies are businesses. Massive amounts of capital must be provided from share holders to support their business and this capital needs to be serviced in order for these share holders not to f*ck off elsewhere with their cash.

Btw what is your definition of abnormal?

tippbhoy

Colonel Sanders wrote: »

I repeat the profits insurance companies have made even in the last few years have by no means been 'abnormal' compared to the amount of capital needed to support their balance sheets. Compare them with other industries to see that.

People seem to forget that insurance companies are businesses. Massive amounts of capital must be provided from share holders to support their business and this capital needs to be serviced in order for these share holders not to f*ck off elsewhere with their cash.

Btw what is your definition of abnormal?

Are you not being a bit hypocritical talking about how insurance is a business to justify your statements yet slating other businesses regarding charging more for phone credit

Regarding abnormal profits in the insurance industry, i'm no expert in this area but i found it very hard to understand in the litigious era we have been in in the past few years that profits continued to rise across the industry. I would call this abnormal. I have no hard facts to support what I'll admit is more perception based opinion but perhaps you may like to detail the figures from your industry to back your statement?

Colonel Sanders

tippbhoy wrote: »

Are you not being a bit hypocritical talking about how insurance is a business to justify your statements yet slating other businesses regarding charging more for phone credit

Regarding abnormal profits in the insurance industry, i'm no expert in this area but i found it very hard to understand in the litigious era we have been in in the past few years that profits continued to rise across the industry. I would call this abnormal. I have no hard facts to support what I'll admit is more perception based opinion but perhaps you may like to detail the figures from your industry to back your statement?

My statement was that if you are not happy with the money being paid to you to provide a service then withdraw the facility to provide that service. I know well enough that shops etc are busineses and need to make profits. It is unrealistic to assume insurers will exit the market completely when rates soften and profitability falls (this would be like me advising you to close your shop over the surcharge issue) but they have been know to withdraw from sectors when the business model makes no sense. For example Hibernian withdrew from the motorcycle insurance market a few years back as they were unhappy with legislation re. pillion passengers and the company I work for adopted a 'barge pole' approach to young drivers after their last forray into that market resulted in large losses across their total motor book (not just their young driver segment).

I can't post specific details from my company accounts as I'd lose my job but have a look at any copy of the insurance statistical review (the old blue book), everything you need is in there.

The thing i was trying to get across is that looking at absolute profits is not a means to say whether they are 'abnormal' or not. The return on capital and target return on capital from your parent company are the important figures.

In terms of excessive would you consider 50m a year profits from a company with a 9-10% market share as excessive? The reality is if a company with about 10% of the market makes 'only' 50m in profits its quite likely the CEO would lose his job (I'm assuming 500-600m in capital is needed to support this firms balance sheet). If profits dropped any lower its quite likely the parent company would sell the Irish operation. The return required on that type of capital employed to keep everyone happy would be anywhere between 60-100m depending on the company (different companies use different target returns.

In terms on profits increasing, the capacity of the market increases each year as more cars are on the road needing insurance, more companies are in operation needing insurance and profits are retained by companies adding to the capital that is needed to be serviced. Also notall companies profits are rising. We are near the soft end of the insurance cycle and rates are, in some cases, idiotic and completely unsustainable. For example my company lost a couple of large commercial policies despite quoting 'break even' premiums (i.e. 0% profit/expense loading)

Premiums are at their lowest level since around 01/02. The PIAB has had a positive effect on liability claims amounts.

Also up to before Sept 11th many insurance companies could made losses of writing insurance but more than compensate with investment returns. This is no longer the case putting more pressure on the underwriting profits. Increased solvency requirements have pushed up the amount of capital finanacial companies need to hold increasing the required abolute levels of profits.

Just to warn you in advance current rates are unprofitable and unsustainable so be prepared for the market to harden and premiums to increase late next year at the very latest.

ScouseMouse

Just a recap, vodafone increased the price to the shops of a phone credit a few years ago. Some shops (mine included), passed it on to the customer as a surcharge. Hence 10 euro credit now costs 10.50. (some shops I said, - some shops decided to accept the pay cut). Well O2 and meteor followed suit.

No increases for the last year or two and now this week Meteor increased the cost of a 10 euro credit to the shops (including mine) by another 12 cent approx.

So expect more surcharges folks !! This affects all retailer who use the Alphyra system but it will probably be across the board.


Queries to meteor customer care.

I dont want to hear it.

thefinalstage

superscouse wrote: »

Just a recap, vodafone increased the price to the shops of a phone credit a few years ago. Some shops (mine included), passed it on to the customer as a surcharge. Hence 10 euro credit now costs 10.50. (some shops I said, - some shops decided to accept the pay cut). Well O2 and meteor followed suit.

No increases for the last year or two and now this week Meteor increased the cost of a 10 euro credit to the shops (including mine) by another 12 cent approx.

So expect more surcharges folks !! This affects all retailer who use the Alphyra system but it will probably be across the board.


Queries to meteor customer care.

I dont want to hear it.

Damn. I mean you are obviously making a profit selling them even without the surcharge so why add it? Either pure greed or staff "training" costs.

Apparently your don't want to hear it :rolleyes:.

ScouseMouse

thelastangryman wrote: »

Damn. I mean you are obviously making a profit selling them even without the surcharge so why add it? Either pure greed or staff "training" costs.

Apparently your don't want to hear it :rolleyes:.

With this increase, my margin will drop to somewhere around 5%. That isnt enough to pay the staff member. Remember this is being triggered by the phone company who is making millions. I am maintaining the status quo.

JohnC.

If it isn't making any money, why not stop providing the service?

thefinalstage

superscouse wrote: »

With this increase, my margin will drop to somewhere around 5%. That isnt enough to pay the staff member. Remember this is being triggered by the phone company who is making millions. I am maintaining the status quo.

Five percent for hitting three keys on a screen? Nice work. 25c per each five euro phone credit bought and thats without a surcharge.

jahalpin

thelastangryman wrote: »

Five percent for hitting three keys on a screen? Nice work. 25c per each five euro phone credit bought and thats without a surcharge.

Out of the five percent you have to pay phone charges to collect credit, electiricty,rent,interest, rates, staff costs, insurance etc. You also have to pay for terminal rental and paper used. The credit is normally paid for by direct debit when the product is recieved.

The marginal cost for the phone companies for providing the service is quite low and they are therefore the ones that are being greedy by reducing the margin on the product.

If shops stopped selling the top-up because of the low margin people would also be complaining that the shop does not provide what they are looking for.

By all means but from the ATM's as they don't charge commisson, the banks can do this because the ATM system is already avaliable and is only another option on the menu, the banks also make money in other ways for example providing account services for the phone companies and selling their product is another reason for the phone companies to use one bank over another.

thefinalstage

jahalpin wrote: »

Out of the five percent you have to pay phone charges to collect credit, electiricty,rent,interest, rates, staff costs, insurance etc. You also have to pay for terminal rental and paper used. The credit is normally paid for by direct debit when the product is recieved.

The marginal cost for the phone companies for providing the service is quite low and they are therefore the ones that are being greedy by reducing the margin on the product.

If shops stopped selling the top-up because of the low margin people would also be complaining that the shop does not provide what they are looking for.

By all means but from the ATM's as they don't charge commisson, the banks can do this because the ATM system is already avaliable and is only another option on the menu, the banks also make money in other ways for example providing account services for the phone companies and selling their product is another reason for the phone companies to use one bank over another.

Do shops only sell credit now or something? Paper is and terminal rental are the only real costs out of what you mentioned. Terminal rental is a fixed cost and the paper is quite cheap plus it can be subject to economy of scale.
Still just greed to be honest. If its such a bother don't stock it at all or is it bringing in extra business?

ScouseMouse

Just remember folks, it is METEOR who have done this. Feel free to question them and if they deny it, pm me so I can call them liars.

The reason I continue to sell it is that things are so tight now that every little bit helps. When this attempted pay cut is imposed on me, I hit back with a surcharge. It is a free country and if you are not happy paying it - go elsewhere. Just like the old one this afternoon, who called my staff member an extortionist. I was in the shop behind her dressed in civvies, I told her if she didn't want it, then fair enough, but no more insults. She carried on so I put her out.

ScouseMouse

thelastangryman wrote: »

Five percent for hitting three keys on a screen? Nice work. 25c per each five euro phone credit bought and thats without a surcharge.

Try telling that to my bank manager who is looking at mortgage repayments of 8000 euro PER MONTH and now my rates increase to 800 euro PER WEEK

Noelie

thelastangryman wrote: »

Do shops only sell credit now or something? Paper is and terminal rental are the only real costs out of what you mentioned. Terminal rental is a fixed cost and the paper is quite cheap plus it can be subject to economy of scale.
Still just greed to be honest. If its such a bother don't stock it at all or is it bringing in extra business?

Ok put it this way say you sell a 20euro credit every 2 minutes for an hour, that's 30*20 = 600, if you are making a 5% profit that gives 30 profit the employees wage will be about 8 euro so that leaves 22 euro. out of this comes all the stores overheads it doesn't leave much much profit.

ScouseMouse

I sell about 3000 euro of credit a week. At a margin between 9.5 and 10.5, that gives me 300 euro per week. Not a lot to pay my bills.

thefinalstage

Noelie wrote: »

Ok put it this way say you sell a 20euro credit every 2 minutes for an hour, that's 30*20 = 600, if you are making a 5% profit that gives 30 profit the employees wage will be about 8 euro so that leaves 22 euro. out of this comes all the stores overheads it doesn't leave much much profit.

Its easy money though and basically an added bonus. You don't have to pay for shipping and the item is always in stock.

micmclo wrote: »

Hmmmm, some small shops charge a surcharge on phone credit.
Xtravision don't have a surcharge.
Tesco offer €2 off when you buy €20 of phone credit
**** "Buy Irish", I know where my money is going!

Sounds good.

ScouseMouse

Of course its always in stock. I pay 25 quid a month for the phone line rental which is dedicated to the machine - not shared with other uses and then there is the rental of the machine. Not to mention when skangers do a fraud of a 20 euro. Although I am not telling you how they do it as it will only spread the word. If I loose just one, I have to sell about 18 more just to cover the cost of the replacement never mind make a profit.

REMEMBER IT IS METEOR WHO HAVE DONE THIS.

Noelie

thelastangryman wrote: »

Its easy money though and basically an added bonus. You don't have to pay for shipping and the item is always in stock.

It's neither easy money nor is it an added bonus. While you think you don't have to pay shipping you actually do, the phoneline isn't free it has to be paid for ok it's not a huge amount but it all adds up and and makes these things return very little profit.

A shop would need to be selling tens of thousands of euro worth of credit every week just to make it worth their while. the only reason shops continue to sell the credit is to get customers into the shop and hopefully they will buy other things that have a larger profit.

I would guess that you're boss is making more than 5% margin on you.

Padraig Mor

superscouse wrote: »

Just a recap, vodafone increased the price to the shops of a phone credit a few years ago. Some shops (mine included), passed it on to the customer as a surcharge. Hence 10 euro credit now costs 10.50. .

But they didn't drop their commission by 50 cent according to earlier posts. You increased your price by more than the drop in commission, increasing your profit margin at the expense of the consumer. I know what I'd call that....

Cabaal

I'm curious, shops have to pay line rental etc for Lotto machines but you don't see them charging 20c extra on a quick pick, if shops are not careful they'll price themselfs out of the market and people will top-up other ways.

When that happens you'll no longer have people coming in with a chance they'll buy something else

ScouseMouse

Since vodaphone started this a couple of years ago, the increase in cost price is about 60 cent.

I am sitting in front of my office scanning pc and the exact price increase was from 7.73 to 7.85. Then you add on the VAT at 21% and you get where we are today.

The margin was originally 10%

Then it went to 7.73 which with VAT = 9.35 so selling at 10 euro gives us 6.5% ( cost - selling = profit, profit / selling = margin)

Now since 24th December, the cost is 7.85 so with VAT you have true cost of 9.49. This now gives you 5.1%. So this is why I have a surcharge. They have cut my wages in the last two or three years by 50%.

N.B. These figures are exact from the current cost price from Meteor via the alphyra terminal - the pink or gray machine that prints them out, that you see in the shops.

REMEMBER, METEOR DID THIS ON DECEMBER 24TH

Cabaal

They haven't exactly cut your wages, they have reduced the amount of profit you can make from one product/service you sell in your shop, you still have many others.

Would you also for example put up the price of Coca Cola cans in your shop because Coca Cola have given you a new fridge which you can only put Coca Cola products in and you need to cover electricity and the fact it takes up space in the shop which you could sell other products in?

ScouseMouse

Cabaal, the point I have is the cost of the product has increased. Supply of a fridge is irrelevant. If I buy something for 9 euro and sell at 10 euro thats fair. If the same products cost goes up to 9.50 it is only reasonable to increase the selling price as well.

thefinalstage

Cabaal wrote: »

They haven't exactly cut your wages, they have reduced the amount of profit you can make from one product/service you sell in your shop, you still have many others.

Would you also for example put up the price of Coca Cola cans in your shop because Coca Cola have given you a new fridge which you can only put Coca Cola products in and you need to cover electricity and the fact it takes up space in the shop which you could sell other products in?

Yes they would. Whats the name of your shops by the way? So I can avoid them...

BTW: Increase in proportion or don't increase at all?