i don't understand why 12month plans are more expensive than 24months.all across networks are the same they charge more on the 12month plans then 24month, eg htc sensation xl on vodafone cost $29pm over 24months, but for 12months its $29 + $40. how there hell do they work these sums out?
http://shop.vodafone.com.au/mobile-details/buy-htc-sensation…
Mod — Moved to Mobile forum.
The different providers want to lock you in for a longer period of time. In buying a 12 month contract, you are purchasing more flexibility and as such, it costs more.
Generally they will look at the cost of a phone and spread it out over the cost of a contract. For example, if you were to buy a contract with a phone that cost them $500 on a $30/month plan, on a 24 month contract they will have an expectation of getting at least $720 out of you.
On a 12 month contract, they will only recover 360, leaving them to bolt on an additional monthly cost to firstly recover the rest of the cost of the phone, and then a profit margin to be added on top. Of course there are bonuses of premium sms/purchasing network content/exceeding plan allowances. However in a 24 month contract you are providing more opportunities for these and are giving the provider cashflow for a longer period of time, so they are prepared to charge you slightly less.
I would imagine there is also a higher proportion of customers who re-sign after a 24 month contract than 12, although have no proof to back that up. Just a feeling.