Mobile phones: Contract VS Pay As You Go
September 15th, 2009
photo: NightRPStar
Historically, if you were a medium-high phone user, you’ve always been able to save quite a bit of money by getting a mobile phone contract. The Pay As You Go model was originally aimed at customers who couldn’t pass a credit check (i.e. low income earners and under 18s). They didn’t offer the networks guaranteed income unlike with a contracts where you’d be charged whether or not you used your phone. Because of this, PAYG users always had to pay more for their calls and texts.
I think the market has totally changed over the last year. People are being a lot wiser with their money in the credit crunch – shopping around between the major networks and between different tariffs. I think a lot more people are making the decision to go with Pay As You Go subscriptions – the latest PAYG deals offer phenomenal value for money, often beating the best contracts available.
Why PAYG?
PAYG is a very competitive market. Because there are no contracts, the major networks are all fighting for your business, all the time. When you’re on a contract, the network knows you’ll be a customer with them for another 18 or 24 months and that they don’t need to work to keep your business. With PAYG, you’ve got the flexibility to switch between networks and tariffs whenever you want and take your number with you.
O2: ‘Simplicity’ contract VS ‘Text and Web’ PAYG
photo: Furryscaly
Let’s compare a flagship O2 contract with their latest Text and Web pay as you go tariff. We’ve specifically chosen to use the Simplicity SIM-only tariff in this comparison: you don’t get a phone (just like on PAYG) and Simplicity has the lowest prices.
Text and Web PAYG (£15/month)
- £15 credit to spend as you wish (equiv. to 300 standard minutes)
- Unlimited Texts
- Unlimited Data
Let’s take a £15/month contract:
Simplicity 1 month contract (£15/month)
- 300 minutes
- 600 texts
- Unlimited O2-to-O2 calls
photo: E01
So on the contract, you get less texts and you get no data allowance. Furthermore, if you don’t use up all 300 minutes in one month on the PAYG deal, you can carry it over to the following month.
What if we wanted the unlimited data on a contract? You’ll pay £20/month and you still don’t get unlimited texts. You do get extra minutes however:
Simplicity 12 month contract (£20/month)
- 800 minutes
- 1600 texts
- Unlimited Web Bolt-On
Whether contract or PAYG is better depends entirely on how you use your phone, but it’s hard to argue that PAYG isn’t competitive.
PAYG customers have the flexibility of being able to switch between networks and the freedom of not being tied into a network (make your network work for your custom!). Worth a consideration.
| About Ken | |
 | My mission is to demystify the world of mobile technology for general audiences and to communicate how mobile technology can enhance every aspect of our daily lives. I've been maintaining the Ken's Tech Tips website since 2004. I have experience communicating mobile technology and presenting new mobile products both online and offline, including at various trade shows and events. You can check out my profile or drop me an e-mail. |
- How Tos & The Basics , Mobile , O2 , Orange , Pay As You Go , Pay Monthly , T-Mobile , Three , Vodafone
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