Virgin Mobile made a splash yesterday with new “Irresistible” plans that throw in a “free” international flight along with your mobile service. Irresistible isn’t the word I’d use to describe them, however.
Value is, as I’ve noted before, a relative thing dependent on what you get out of a service or product, but for the purposes of comparison, I’m going to look at what you get on paper out of the Irresistible Plan. The basics are unlimited calling and texts, a “free” flight to Fiji, New Zealand, or Vanuatu from an Australian capital city and the ability to upgrade your phone after twelve months if you then re-contract for a further two years.
[table]
Virgin Irresistible Plans,,,,,,
Cost,Minimum Plan Cost,Calls,Texts,Data,Phones,Extras
$140/month for 24 months,”$3,360 “,Unlimited,Unlimited,6GB/Month,”Samsung Galaxy S4, HTC One, Sony Xperia SP, Samsung Note II 4G, Nokia Lumia 720, Samsung Galaxy S3, Apple iPhone 5, Apple iPhone 4”,Virgin Australia return international flight to Fiji or New Zealand or Vanuatu from selected capital cities within Australia
[/table]
But what’s all that worth? It’s fairly easy to get an unlimited calls/texts plan for around $40 (or less) month with around that level of data from any of the pre-paid Telstra resellers; Optus resellers — and Virgin’s on the Optus network, although it’s technically not a reseller as it’s wholly owned by Optus — tend to be even cheaper.
But let’s take that $40 price point as it stands, bearing in mind that this isn’t a prepaid service, and you could go “over” cap if you made, say, a lot of international phone calls. You can roll over your “unused credit”, apparently, but that’s meaningless for an unlimited plan unless they mean the data inclusion. (Update: Checking the critical information summary, they don’t, although there is a $200 “value” towards international calls which looks like it does roll over)
That leaves $100 out of your pocket each month for the phone and the single return international flight.
The range of phones is attractive enough, although there’s some weird inclusions. Why would you opt for an 8GB iPhone 4 when you can get a 64GB iPhone 5 for exactly the same price? Why is the Nokia Lumia 720 on the deal, but not the 920? Why’s the Galaxy S3 there, and who’d want one in the face of either a Galaxy S4 or Note II?
In any case, if we only really look at the actually premium phones, you’re talking an outright price of around $800, give or take, at Telco prices. Again, yes, you can get them cheaper elsewhere, but we’ll go with the kinds of figures that Telcos use, and average out across all the handsets.
But before we buy the phone, we’d better book the “free” flight. Flights are “subject to availability”, which could mean just about anything, but the other key consideration is that you have to book the flight within the 4-9th month of the 24 month plan.
So for the purposes of comparison, I looked up a flight to Fiji leaving in April 2014. Prices obviously vary depending on time of year, popularity, time of flight and so on, and it’s not exactly clear what would happen if absolutely no flights were available on your travel dates, although it’d obviously pay to be a bit flexible.
In any case, the cheapest Saver fare to and from Fiji (flying 8/4/2014, returning 28/4/2014, because those were available flights for normal bookings) at the time of writing appeared to come to a total of $688 before any other service fees. If you could book the most expensive Flexible fares, it does shoot up a lot; the full Flexi fare is $1561 before service charges, but the terms and conditions of the Irresistible plan outline that you’re getting the saver fare only.
Time for some quick maths work, then. The total cost of the contract over 24 months is at least $3360. 24 months of a $40 plan with similar inclusions is $720. A theoretically applicable flight at cheapest rates is $688; it’s always feasible that you may be able to book a more “expensive” flight which would offer you more value, but for the purposes of argument it’s the figure I’ll use because it’s entirely feasible those are the flights you’d get.
That leaves a grand total extra of $1952 for the phone. Take off the averaged $800 purchase price, and you’re still spending more than $1000 for the privilege of updating the handset after twelve months if you re-contract for a further two years, and (allowing for the year you’re already on the hook for), a further $1680 in contract fees.
Irresistible? I don’t think so.
Aren’t you completely ignoring the fact that it’s actually TWO phones and TWO flights in 24 months (as long as you recontract at the 12 month mark?)
I also don’t see why offering the older phones is a DOWNSIDE, surely more choice is better? Even if the choice is (in most cases) obvious? Worth mentioning as well that Virgin’s cancellation fees after 6 months are dependant entirely on the value of the handset, so, say if you got the cheap LG F5, kept it for 6 months and 1 day, took your flight, then cancelled, you will have paid a total of 1112 for all those inclusions, plus the flight, plus the phone. Compare that to the iPhone 5 64Gb (1300 or something worth of cancellation) and it’s looking a little more attractive.
Granted, you have to sign another 24 months from that date on the same plan, but the longer you stay on it the better the returns. (Yes, you get the flight AND a new phone each time you sign)
It’s worth mentioning that the type of person that would benefit from unlimited calls, text and 6gb of data would be a heavy user. Perhaps business? International calls are a pretty nice inclusion where Boost/Amaysim/Kogan/TPG etc don’t have them. PLUS only Boost of those networks tends to get speeds even CLOSE to 4G (next G support, or even 4G if you fool the system a bit), and that comes with 3GB of data. HALF the 6Gb Virgin are offering (on Optus’ full network, including 4G).
SO, using your calculations properly:
$140×24 = 3360 (Total Cost)
-$800×2 = 1760 (Minus 2 $800 Phones)
-$688×2 = 384 (Minus 2 $688 Flights)
/24 = $16 Per month, for unlimited calls and texts with 6GB data. (Working out the per month cost for actual phone use, all that is offered by the cheaper carriers)
Admittedly, you’re forced into taking the flights, and upgrading where you may not have otherwise. That IS a downside. But if you’re anything like me and don’t allocate enough time/money to holidaying, it could be a decent kick in the relaxation direction.
And finally, if you use your phone for your business or work purposes at all, you can claim a portion of this all on tax, reducing the $16 EVEN FURTHER.
There’s also a fair few other bits and pieces where you can save money with Virgin (over the cheaper wholesale carriers), like getting velocity points on every dollar you spend on the bill (I think it’s 3? I need to research that part more), or getting cheaper deals on virgin wines/insurance etc (or at the very least a $50 “additional service” bonus)
I’m currently on Boost’s $40 Unlimited prepaid option hacked to have 4G, which is hard to keep receipts for tax purposes, and buying an outright phone risks warranty issues (especially if you only get 12 months on a grey import like kogan or mobicity). I’m going to ditch my mobile broadband service in the iPad (Saving me a further $20 a month) and use the 6Gb over the 3Gb (phone on Boost) + 2Gb (ipad) that I currently have.
I’m switching. I understand that it may not suit everyone, but in the grand scheme of things, I think it’s being unfairly criticised here.
Nick
Note A: It does suck that their other plans all got a little worse overnight, but eh, they’re only staying in line with the parent company (optus) and they still offer the same V2V etc that optus don’t; I just thought I’d concede THAT point at least 🙂
Note B: I realise my calculations rely on the user staying on their plan infinitely (to get as low as <$16 per month) BUT what you've outlined is the absolute MOST they'll pay/LEAST value they'll get.
Interesting thought on the cheaper mobiles, but the flipside of that is that if you do stay the term of the contract, you’ve spent exactly as much as somebody with a much better phone. You’re right, though, that choice is no bad thing. Equally, yes, if 4G speed is a consideration for you, that’s something you’d only get via Virgin on a contract of this type, but again I’d advise shopping around Telstra/Optus/Vodafone deals as well.
The tax point is fair, but that’s true of any mobile use. Not sure what your warranty point is (and it’s worth pointing out that Australian consumer law trumps manufacturer warranty based on “reasonable expectations”, which is rubbery, but further suggests that getting the better phone might be a better deal)
Your calculations are a little out on the 2-flights/24 month ideal, though, because in order to re-contract (if you did so dead on the 12 month mark; it gets a little worse if you leave it later), as mentioned in the article, you’re up for a further 12x$140, making the 36 month total (original 24-month contract+new contract after 12 months) $5040.
$140×36 = 5040 (Total Cost)
-$800×2 = 3440 (Minus 2 $800 Phones)
-$688×2 = 2064 (Minus 2 $688 Flights)
/36 = $57.33 Per month.
Fair points, but here’s my reasoning.
Of course you’ll likely get the best phone you can, the LG example was just to show that 840 ($140×6) plus the cancellation fee at that point (288) is 1128, take from that the outright cost of the phone (virgin calls it 384, but lets be generous and use 300) and the cost of the flight you’ve taken (688) and you’ve paid $140 for 6 months of unlimited Calls text and 6gb of 4g data. So $23.30 a month. At that point, even if you used a phone you’ve bought outright, it’s better value than an a $40/m offering (though that’s assuming you have $300 value in the LG, for comparisons sake lets say you sold that for $200 “second hand” as soon as you left the shop, the monthly cost would be exactly $40, or what you would have paid for HALF the data, no unlimited calls, no taxation benefits and no 4G)
The sneaky cancel aside, we move to the tax point. Topping up with boos is done without receipts primarily, using their dealer menu. I’m sure there’d be a way to claim that $40 a month on tax, but it’s not as “nice” as just having a tax years summary in your online account.
The big point to mention here is that you’ll only be claiming a percentage of $40 a month based on your phone use. In virgins case, you claim that same portion of $140, or 3.5 times as much. Obviously paying more is rarely beneficial on the whole, but now consider if you’d have made a perfect comparison by buying that $688 flight. Could you claim that back on tax? Nope, unless you were going to Fiji/Vanuatu/NZ for business. With the exception of NZ I’d say that’s unlikely! So now this is a pleasure flight that you can legitimately claim on tax (as its “free” with your phone plan, which you use 50% for business)
So I guess what I’m saying is that while you can claim a part of phone use back, it’s a much larger part that in effect comes off a pleasure flight 😀
Where warranty is concerned I just meant that a large number of people buy their outright smartphones from kogan, mobicity or a number of other grey importers. As the goods are grey imports AND not contracted for 24 months (surely where that reasonable expectation comes into play) they offer 12 month warranties. Even if you want to argue the ACCC with them (which I certainly don’t) it’s an extra hassle! The manufacturers the,selves certainly won’t honour the warranty on a Bulgarian Galaxy S4 in Australia (unless they’re chasing a little goodwill)
Finally on the cost front, you’re right, my calculations ARE idealistic, but the costs TEND TOWARDS that $16/m the longer your stay on it. S initially you worked it out to be $78/m for your phone service if you only sign initially and upgrade once. In your reply you worked it out to be $58 or so if you did it one more time. It follows then that if you upgraded twice (3phones/flights) it’d work out to be $47, then again $40. So if you do this for 5 years you will have matched the cheap plans in total price. BUT you’ll have Been able to claim all that tax free travel (or reduced at least). 5 years seems a long time I know, but I know I’LL use my phone for the next 5 years, and with everything else considered, still the best option for me 🙂
Many others no, obviously some will be content with the same phone for 3 years, with not taking a yearly holiday, and without the added complexity of tax deductions (but you’d be crazy not to if you use it at all for business!)
I thought a key component of this deal was that flight is from any capital city. The cost of a flight to Fiji from Perth would be more expensive than from Sydney, this makes this deal more appealing to those from the west coast. With the saver fares Perth to Nadi starting at 1100 rising to 1400 return.
$140×36 = 5040 (Total Cost)
-$800×2 = 3440 (Minus 2 $800 Phones)
-$1100×2 = 1240 (Minus 2 $1100 Flights)
/36= $34.44 p/m
What you may be missing is that you still need to pay taxes on the flight.
While you might be getting more ‘benefit’ for your Perth to Nadi trip, keep in mind that you are also paying more for the trip.
On the $1082 trip currently advertised for Perth -> Nadi with Virgin, taxes are advertised as $280 (out of your pocket).
So, to correct your figures:
$140×36 + $280×2 = 5600 (Total Cost)
-$800×2 = 4000 (Minus 2 $800 Phones)
-$802×2 = 2396 (Minus 2 $802 Flights)
/36= $66.55 p/m