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Pre-pay handset commerical deals in the UK?
Published by Ewan on Tuesday 29th July 2008, 18:36 Comments | Filed under: Mobile

Saw this on MoMoLondon and wondered what the answer was:

Does anyone know the approximate commercials around pre-pay retailer sales in the UK
market?

I’m not looking for detail, simply something on the lines of:
“retailer gets around x % of handset sale cost” etc.

Anyone know?

Many thanks

Paul

I’d like to know too.

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  • i suspect its not so simple - retail sim free would be easier as its likely to be a standard 50-40%.
    but with pre pay theres still some (but much less) subsidies.
  • Tim
    Handsets are sold at below cost price so a direct subsidy has to be given to the retailer from the distributor. To prevent box breaking or miselling, the subsidy, and potentially the full cost of the handset, will be clawed back from the retailer if the handset is not connected to the network, or in some cases, not enough revenue (top ups) is made within a set period of time. Problems obviously occur as the retailer has no knowledge of how much a pre-pay user spends, or whether the handset was indeed connected, and so relies on the honesty of the network and distributor. With the bodged accounting systems that have existed in the past, this can be a very precarious relationship.

    This is not made any easier for the smaller retailer if the big outlets, such as Argos, get preferential terms.
  • AJ
    As a very general rule of thumb in business the retail price is normally about 2.5 times the wholesale price - I have no market specific knowledge for the mobile sector though. Variations usually depend on the dynamics within any particular sector/industry.

    I dont think this would differ very much even if there was a subsidy since this is purely between the buyer and the network.
  • prepay phone tend to be around 1/4 to 1/3 cheaper than the sim free versions.
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