3GScottishUser
31st March 2005, 08:05 PM
It has recently been reported by HWL that their aquisition cost is reducing. In the last quarter of 2004 it fell from 299 to 271 per customer.
I dare say this takes into account the falling cost of 3G handsets but how can aquisition costs fall when customers pay less money?
Here is my analysyis:
In 2003 you got a 3 handset and 3 months line rental at half price. On a £25 contract that got 3 a revenue of £412.50 minus the cost of the dealer commission and handset cost. For argument lets say the dealer gets £100 and the handset cost £170. So aquisition cost £270 or thereabouts.
In 2004 you could get a 3G handset with 12 months rental at half price or better (as low as £5/month after cashback). Taking the former example thats £150 revenue for 12 months. The commision to the dealer would have been about the same as in 2003 (£100) and handset a bit less at £150 or thereabouts. So aquisition cost £250 plus an extra 9 months half price line rental £112.50 (provided by the dealer). So true aquisition cost must be about £372.50 at best.
How then can aquisition cost be falling? Are cashbacks from 3 counted as 'promotional and advertising support', taking them out of the aquitition equation? Seems like the most likely answer. How else could they claim what they have.
The stats all companies produce always tell the story they want investors and the press to believe but those who have been following this product know that what has been happening in the market does not concur with what is being claimed...... Accounting procedures and designations have much to answer for perhaps?
I dare say this takes into account the falling cost of 3G handsets but how can aquisition costs fall when customers pay less money?
Here is my analysyis:
In 2003 you got a 3 handset and 3 months line rental at half price. On a £25 contract that got 3 a revenue of £412.50 minus the cost of the dealer commission and handset cost. For argument lets say the dealer gets £100 and the handset cost £170. So aquisition cost £270 or thereabouts.
In 2004 you could get a 3G handset with 12 months rental at half price or better (as low as £5/month after cashback). Taking the former example thats £150 revenue for 12 months. The commision to the dealer would have been about the same as in 2003 (£100) and handset a bit less at £150 or thereabouts. So aquisition cost £250 plus an extra 9 months half price line rental £112.50 (provided by the dealer). So true aquisition cost must be about £372.50 at best.
How then can aquisition cost be falling? Are cashbacks from 3 counted as 'promotional and advertising support', taking them out of the aquitition equation? Seems like the most likely answer. How else could they claim what they have.
The stats all companies produce always tell the story they want investors and the press to believe but those who have been following this product know that what has been happening in the market does not concur with what is being claimed...... Accounting procedures and designations have much to answer for perhaps?