# The marketing model for cel phone service **URL:** \ **Category:** Factual Questions\ **Created:** [September 8, 2005, 3:12pm UTC](https://boards.straightdope.com/t/the-marketing-model-for-cel-phone-service/320660 "2005-09-08T15:12:25Z")\ **Posts on this page:** 7\ **Page:** 2
**Author:** ![gazpacho](https://avatars.discourse-cdn.com/v4/letter/g/6f9a4e/32.png) [@gazpacho](https://boards.straightdope.com/u/gazpacho)\ **Post date:** [September 8, 2005, 6:44pm UTC](https://boards.straightdope.com/t/the-marketing-model-for-cel-phone-service/320660/21 "2005-09-08T18:44:27Z")
> [@Fear Itself](#): > > Exactly. So why don’t landline telco’s offer “premium” rates with lower monthly prices? For that matter, why don’t traditional telcos charge by the minute for local service? Why is that better for cel phones, but not for landlines? I am reminded of the old days when internet service was by the minute, but it was abandoned under market pressure. Might that happen in cel phone service in the future? I believe that they do. I haven’t had a land line for quite some time but I remember there was an option to have a lower monthly bill and a charge for local calls. Also for home users there is not much competition for land line phones so there is not as much a need for marketing and different pitches to appeal to different people. Cricket cell phone service sells all you can talk plans for $30 a month to $45 a month depending on weather or not you want roaming voice mail etc. ---
**Author:** ![Eonwe](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/eonwe/32/240_2.png) [@Eonwe](https://boards.straightdope.com/u/Eonwe)\ **Post date:** [September 8, 2005, 6:53pm UTC](https://boards.straightdope.com/t/the-marketing-model-for-cel-phone-service/320660/22 "2005-09-08T18:53:00Z")
Does anyone know what the business model is for cel phone makers themselves? I always look questionably at the ‘retail’ price that I’m avoiding by signing a contract and getting a ‘discount.’ What’s the markup for a ‘retail’ priced cel phone? Do they make even close to a significant percentage of their income on ‘retail’ priced phones? ---
**Author:** ![groman](https://avatars.discourse-cdn.com/v4/letter/g/73ab20/32.png) [@groman](https://boards.straightdope.com/u/groman)\ **Post date:** [September 8, 2005, 7:05pm UTC](https://boards.straightdope.com/t/the-marketing-model-for-cel-phone-service/320660/23 "2005-09-08T19:05:03Z")
> [@Eonwe](#): > > What’s the markup for a ‘retail’ priced cel phone? Do they make even close to a significant percentage of their income on ‘retail’ priced phones? The manufacturing costs of a cell phone are relatively low compared to the retail price. However the markup is not that high either. What you’re paying for is basically the development cycle that allows manufacturers to bring a video phone with mp3 and 3d to market and then discontinue it in a year or two and come out with an even better (and completely different one). ---
**Author:** ![rfgdxm](https://avatars.discourse-cdn.com/v4/letter/r/c0e974/32.png) [@rfgdxm](https://boards.straightdope.com/u/rfgdxm)\ **Post date:** [September 8, 2005, 7:11pm UTC](https://boards.straightdope.com/t/the-marketing-model-for-cel-phone-service/320660/24 "2005-09-08T19:11:30Z")
> [@](#): > > So if I host a website on my personal user space that becomes wildly popular, and my bandwidth suddenly increases by a factor of a thousand, aren’t ISP’s in the same position? They can demand a higher fee or cut off my service. Nobody has a gun to the heads of either one, forcing them to provide service they don’t want to, yet one uses the contract model, and the other doesn’t. Your ISP WILL cut off your website if bandwidth goes over the limit. Cell phone companies do the same with prepaid plans. Postpaid plans basically extend credit, and you pay at the end of the month. > [@](#): > > Exactly. So why don’t landline telco’s offer “premium” rates with lower monthly prices? For that matter, why don’t traditional telcos charge by the minute for local service? Why is that better for cel phones, but not for landlines? I am reminded of the old days when internet service was by the minute, but it was abandoned under market pressure. Might that happen in cel phone service in the future? At least some landline companies do. My landline telco offers unlimited local AND long distance calls for a flat $40 a month. Or I can pay per local call (unlimited minutes each local call), and a per minute rate for long distance calls in the US. ---
**Author:** ![Kevbo](https://avatars.discourse-cdn.com/v4/letter/k/e47774/32.png) [@Kevbo](https://boards.straightdope.com/u/Kevbo)\ **Post date:** [September 8, 2005, 7:28pm UTC](https://boards.straightdope.com/t/the-marketing-model-for-cel-phone-service/320660/25 "2005-09-08T19:28:51Z")
> [@groman](#): > > The manufacturing costs of a cell phone are relatively low compared to the retail price.What you’re paying for is basically the development cycle that … EFZ! and the development costs go well down the “food chain”: Specialized semiconductors, smaller ceramic filters, higher contrast/resolution displays, latest and greatest battery technology enabling longer talk time, and quicker recharge, etc. Oh, yes, remember that somebody has to write and support all the software it takes to make all this stuff play ball. While it gets taken for granted, A typical cell handset is about 5X more advanced than the handi-talkies police carry, yet sells for about the same price. ---
**Author:** ![groman](https://avatars.discourse-cdn.com/v4/letter/g/73ab20/32.png) [@groman](https://boards.straightdope.com/u/groman)\ **Post date:** [September 8, 2005, 7:31pm UTC](https://boards.straightdope.com/t/the-marketing-model-for-cel-phone-service/320660/26 "2005-09-08T19:31:13Z")
> [@Kevbo](#): > > While it gets taken for granted, A typical cell handset is about 5X more advanced than the handi-talkies police carry, yet sells for about the same price. 5X is probably very low. The software alone on my cell phone is probably more complex than your average police officer. ---
**Author:** ![Fear\_Itself](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/fear_itself/32/19637_2.png) [@Fear\_Itself](https://boards.straightdope.com/u/Fear_Itself)\ **Post date:** [September 8, 2005, 9:28pm UTC](https://boards.straightdope.com/t/the-marketing-model-for-cel-phone-service/320660/27 "2005-09-08T21:28:05Z")
> [@rfgdxm](#): > > My landline telco offers unlimited local AND long distance calls for a flat $40 a month. Or I can pay per local call (unlimited minutes each local call), and a per minute rate for long distance calls in the US. Do they require a credit check and a two year contract? [Previous page](https://boards.straightdope.com/t/the-marketing-model-for-cel-phone-service/320660.md?page=1)