[UPDATE] – 25 April 2016
Vodacom have now launched a R0.79 call rate (per second billing) for their prepaid customers. I briefly checked other contract rates and can’t find anything below R0.95. I can’t help but feel that contract customers are subsidising the battle to win over prepaid customers.
Switching to prepaid could save you R5000.
I’ve been with Vodacom for around 12 years the first 11 of those were as a contract customer. Back in the day, contracts were the way to go. Not only did you get fantastic call rates, you usually received a free phone when you renewed your contract but you didn’t have to buy little scratch cards to recharge every time you ran out of Airtime. I’ve been on Pay as you Go for the last year, and honestly, it was the best decision I’m made in a while.
Since Vodacom’s little price adjustment saga earlier this year, people are really upset that they are for the first time being held to the fine print of their contracts which allows Vodacom (and other network providers) the right to adjust your contract price as and when they feel like it.
So, in light of this, I’m going to let you in on a little secret. There is absolutely NOreason that you need to be a contract customer any more.
Overall Price
Let me start with the financial argument, below is a table of the latest Vodacom contract prices. The call rate for a prepaid customer if R1.20, all the time and to any network. You buy data bundles at the same rate as contract, but you can also pay R1000 for 1 GB a month for 12 months (that’s R83.33 per Gig, cheapest rate around).
If we do a little fancy footwork, we can calculate exactly what you’re getting for your money. You can see the detail at the end of the post of how I got there. There are only really two columns that matter in this Table. The out of contract rates for calls (between R1.25 and R1.75) and the Equivalent Rates for the minutes that you are buying (the last column). The detail of how I got here is included at the end of the post if you’re interested.
Let me give you the best case scenario, let’s say I’m on a Smart XL contract and I use the following each month – exactly 400 minutes a month exactly 800mb of data and let’s be honest and say 50 sms’s cause really now who are you sms’ing. That would mean each month I spend the monthly fee of R739.
Let’s do the prepaid equivalent calculation. I purchase a 1 GB data bundle for the month at R149, I then buy a 50 SMS bundle for the month for R25. I then make 400 minutes worth of calls at the any network any time per second rate included in my prepaid subscription of R1.20. The total cost for the month R654. So I saved R85 by doing absolutely nothing.
Let me give you an even better example. Let’s say I’m on the Smart M package, I pay R319 per month and I get 120 minutes, 300mb of data and 300sms’s. The prepaid equivalent. I buy a 12 month 1Gb a month up front bundle for R1000 (that’s R83.33 per Gb), I pay the 50c for the 10 sms’s I use a month and I make 120 minutes worth of calls. That comes to a grand total of R250, I’ve just saved R69 and got three times the data.
A more realistic usage scenario for prepaid. I purchase my 12 GB’s upfront giving me a monthly cost of R83.33 for one Gig for the month. I then use around 350 minutes as I didn’t have a very busy month at R1.20 per minute which comes to R420, I pay for my itemised report at R10 and I use 10 sms’s at R5. This would be a grand total of R518.It’s a saving on a Smart XL contract of R220.
Claiming Back your Calls
Vodacom prepaid offers you the ability to print adhoc itemised billing reports for R10. So you could essentially only print off the report when you need it and submit for a refund. I’m sure that you can get a tax invoice for your recharge costs, I just haven’t investigated this yet.
Free Cell phone
Free cell phone, well not so much. Gone are the day of free phones bundled into contracts. This isn’t Vodacom’s fault, to be fair you’re no longer wanting a Nokia 3210 but an IPhone 6 smart phone. You therefore pay a monthly fee to get the phone on top of your contract price. So if I wanted a Apple IPhone 6 64Gb through Vodacom I’m in for R648.99 x 24 months which equates to R15575. The solution, pop into FNB connect and get the same phone for R575 x 24 months which means an all in cost of R13800,that’s a savings of R1775.
All in all, over the period of 24 months, including the phone and an itemised bill each month, you’re looking at a Vodacom price of R33 311. If I went the prepaid option and FNB, which provides full flexibility, over 24 months I’m paying R28 200.
That’s an overall saving of R5 111.
Assumptions:
I’m not talking about sms’s. Neither should you. If you still use sms’s then you are probably not reading this any way.
I’ve excluded all the bonus talking points and other blah blah you get on prepaid, it’s pointless but if you do happen to be on the phone at midnight then you could score even more.
Playing with prepaid packages – you can change the type of package you’re on daily, so if it’s worth your time you can switch every evening to make cheap calls then switch back. It gets quite complicated, but may save you a few bucks.
uChoose is a half and half contract, prepaid on a contract, you get Airtime cheaper, but you have to sign up for 24 months.
I haven’t looked at other networks, but I’m sure you would find something similar as the fight for market share is happening in the prepaid space in South Africa, not the Contract space.
Prices in the table:
To calculate the values I’ve taken the monthly subscription subtracted the cost of the data (at a 1 GB bundle rate of 14.9c per Mb which is very generous) and subtracted the sms costs (which is a ridiculous concept, who uses 800sms per month?) This brings you to two values, an in contract call rate and an out of contract call rate. The only contracts that have a lower in contract call rate is the Smart XL and Red Premium at a rate of R1.09 and R1.13 respectively per minute compared with the prepaid call rate of R1.20. A small caveat here. In order to achieve this great call rate, you would have to actually use your 800sms (which again is ridiculous) and have to use over 363 minutes each month on the Smart XL, any less and you’re losing out. Minutes also expire so you would really need to use them up. Also important is out of bundle rates are cheaper for contract, but you really don’t want to be out of bundle in any case, so you buy a bundle any way at the same rate whether you are prepaid or not.
Wesley Tucker 