THE TARIFFIC PERFECT PACKAGE TRACKER - Q2 2016: CONTRACT CANCELLATION FEE EDITION

June 30, 2016

“How much does it cost to cancel your cellphone contract?”

Are you fed up with your current service provider and looking to leave before your contract expires? In such cases, you’ll usually have to pay an early contract cancellation fee (or termination fee) in order to get out of your contract. But how much will this cost you?

As part of Tariffic’s quarterly ‘’Tariffic’s Perfect Package Tracker’’, in which Tariffic reports on changes in the South African cellular market, the company investigates the various cancellation/termination charges that users will be expected to pay across all South Africa’s mobile operators if they want to cancel their contract before it expires. The report uses the examples of Susanne, Dineo, Howard, and Tshepo, all who have their own unique usage patterns and handset choices, and are on their ideal hypothetical contracts with each network. Each user is also shown to be at different stages in their contract cycle.

Key findings from Tariffic’s Perfect Package Tracker – Contract Cancellation Fee Edition

  • The cancellation fee that you’ll pay is based on a number of factors, including:
    • how long is left on your contract;
    • how much you’re paying monthly;
    • how much the cellphone that you received with your contract costs; and
    • in some cases, an admin fee charged by your service provider.
  • Often the most substantial part of this calculation is the paying back of the cost of your handset. For example, we find that even though Susanne and Howard are looking to both cancel their contracts with 12 months remaining, Susanne will pay an average of R2,757 more than Howard to terminate her contract as she received a more expensive phone with hers (she was also on a more expensive contract).
  • Based on our analysis, we found that Vodacom was usually the most expensive when it comes to cancellation fees (in 3 out of 4 cases), followed by MTN, while Cell C and Telkom were usually the cheapest.
  • It may seem obvious, but you will pay a lot less to cancel your contract as you get closer to your contract expiry, as can be seen by how much less Tshepo will have to pay than the other people analysed.
  • We also find that regardless of your circumstances, it’s not cheap to terminate your cellphone contract. Tshepo, our user with the least months remaining on her contract, still has to pay in a minimum of R3,300 or a maximum of R4,852 to terminate her contract. Dineo, who has 18 months left on her contract will pay anywhere between R9,931 and R15,377!
  • The fees you would have to pay for early cancellation show exactly how much you are spending on your cellphone contracts over your contract period. It may not seem too bad on a monthly basis, but it really does add up! So we recommend you start saving on your cellphone bills today and find the perfect contract for you based on your unique requirements (which you can do for free at http://www.tariffic.com).

THE TRACKER FINDINGS

ABOUT TARIFFIC’S PERFECT PACKAGE TRACKER

Tariffic constantly analyses the South African cellular market, so that it can help businesses and consumers save on their cell phone bills. Tariffic performs this analysis by using its sophisticated software to match cell phone users with the cheapest tariff plans and bundles, according to their exact behaviour.

The South African cellular market is incredibly complex and the fact is that most people are spending far more than they should on costly cell phone contracts that generally don’t suit their needs. Between Vodacom, Cell C, MTN and Telkom, there are over 10 000 different combinations of cell phone contracts and add-on bundles and it’s almost impossible for ordinary South African cell phone users to choose the contracts and bundles that actually suit their needs… or their pockets.

At Tariffic, we understand that everyone is unique and that everyone uses their cell phones in their own individual way. It is for this reason that we focus our Tracker on four unique users with their own unique usage patterns. Using our proprietary software, we scientifically calculate which packages would be best for each user and how much those packages would cost. We call this tariff optimisation. This quarter, we have shown the best options for each user based on the specific phones that they are looking for.

We optimise many different users every quarter, utilising the exact same parameters each time. We then select a subset of users whose change in recommendations best encapsulate the changes to the cellular market over the period. Doing this allows our Tracker to function as a gauge of the South African cellular landscape, identifying how the cellular market is improving or deteriorating for consumers over time.

We hope that this tracking index will shine some light on the complex cellular market and inform consumers how they should be saving money and selecting their packages.

Note that all our package recommendations were extracted from Tariffic’s brand new website and cellphone optimisation tool available for free at http://www.tariffic.com.

HOW TARIFFIC’S OPTIMISATIONS WORK

Tariffic’s optimisations are performed using our award-winning software, which analyses cell phone bills. Tariffic is able to look at a person’s current monthly spend along with exactly how that person uses their phone, in order to calculate what their spend would look like on each network, with the optimal contract/package and bundle combination.

Tariffic’s optimisations tests what a person’s bill would look like on all the different packages and bundle combinations out there and in this way is able to calculate exactly what a cell phone bill would come to each month, taking into account the costs of subscriptions and bundles, as well as the cost of usage over and above subscription (out of bundle spend).

Tariffic’s optimisations do not expect a person to change how they use their phone, as it is based on their own actual historical usage patterns.

Tariffic will only recommends ‘deals’ that are publicly available from the service providers. Tariffic does not take “night-surfer” or any discounted data rates into account for data contracts. Tariffic will only recommend packages from South Africa’s four networks. Tariffic includes an amortised connection fee where applicable and estimates CIB values where they are not available. Note that Tariffic’s recommendations do not take network quality into account and are purely based on price alone.

The following notes are applicable to this quarter’s tracker:

  • Termination fees were calculated by calling the operators call centres and requesting termination quotes for various contracts. In cases where the calculated fees varied from the expected fees, based on other articles published, the operators were contacted for comment.
  • The deals used were the latest as of the publication of this tracker.
  • The estimated average out of bundle spend was taken as the outstanding current amount still due to the providers. This component can vary drastically depending on the month’s usage and cannot be predicted accurately.
  • Termination fees were calculated on the Tariffic optimised packages, with a specified expiry date and phone. This will change if you:
    • are on a different package
    • have a phone that is a different price range
    • have more or less months remaining on your contract period
  • A handset fee is calculated using the broadsheets services providers distribute by comparing the handset deal price to the prices of the base packages.

ABOUT TARIFFIC

Tariffic was founded in 2011 to help consumers and businesses save money on their cellphone bills. Tariffic’s mission is to help cellphone users save money by helping them be on the right package, with the right bundles, according to their exact usage.

Tariffic’s award-winning software has been recognised as a unique innovation, on an international scale. In 2012 Tariffic was awarded a Support Program for Industrial Innovation (SPII) grant for global innovation by the Department of Trade & Industry deeming components of its software a world first. In 2013 Tariffic was invited to the Enterprise Technology Show to present and discuss its global innovation, and in 2014 Tariffic was a finalist in Microsoft’s Start Up Tel-Aviv competition and a guest at the Industrial Development Corporation of South Africa’s prestigious Innovation Summit, to name a few accolades. In 2016, Tariffic received Frost & Sullivan’s 2016 New Product Innovation Award in the Value-Added services industry in South Africa. Tariffic is also a graduate of Microsoft’s BizSpark and BizSpark+ programmes.

Tariffic is partly owned by Saicom Holdings. The Saicom group of companies are leaders in business telecommunication, largely focusing on telephony systems for corporate clients, VoIP operators, and international Telco carriers. Through its subsidiaries, including Saicom Voice Services and Saicom Technology, Saicom have rolled out telecommunications solutions to government departments, municipalities, financial institutions, and some of the largest call centres and corporations around South Africa and the African continent.

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