How to save 50% on your phone bill

‘Bull crap!’ How to Save 50% on your phone bill 2017

  • We’re calling ‘bull crap’ on the big phone companies!
  • The way they’re selling us phones causes us to waste literally hundreds of dollars a year.
  • We have compared dozens of phone contract plans with alternative and we think we can save the average user at least 50% on their phone bill.
  • We consistently find with a few simple strategies, we can deliver that sort of saving.
  • We’ve included three things on this page to help in your search.
  • First, we explain the bull crap – the way things work at the moment.
  • Then we use the tricks and tips that those who work in the industry use when they’re buying a phone.
  • We look at the key facts you need to know about the phone companies and your usage which will the savings.
  • Second, we consider alternatives – including leasing phones, buying new phones internationally, refurbished phones and second hand phones.
  • Finally, we explain how smart people are keeping their phones longer to lower their overall cost of ownership

How to save 50% on your Australian phone bill – By avoiding the bull crap

The key things you need to know to save 50% on your Australian phone bill are listed here. There are two components to the savings you can make. We recommend that you consider both the device and the plan to squeeze as much out of the costs you’re facing as possible.

We start here, with the SIM you need and some obvious advice: Pick a phone plan that suits you. The major problem most people have in doing that is establishing how much data they’ll need. We offer some support (below) and additional resources on that subject. Then we look at the right types of plan to buy – considering all the SIM Only / prepaid options there are out there. Worth highlighting for you are the smaller phone companies as the place to get the best value.

In the second half of this article, we go on to explain the other side of the equation – the phone itself. This involves a change. It might surprise you but we advise against buying a phone under contract and provide the reasons this course of action should be the last on your list. We try and help you see beyond the bull crap the phone companies are dishing out.

Then we tell you the important bit – the more economically effective alternatives. In those we include some ideas you may not have thought about: We weigh the pros and cons of buying phones, legally, on the international market from companies like Kogan. We show you where you can get refurbished phones and inform you about some important facts you may not be in possession of. For example, did you know you can often get a warranty with a refurbished phone ? We go on to consider Second hand phones which now make up 20% of the Australian device market.

Finally, we introduce you to a major trend in phone purchases – keeping your phone longer, The average tenure of an Apple phone user has increased 6 months in the last 2 years. This alone could save you 10%.

Throughout this article you will see links to other areas of this site. If you need a definition, clarification or more information, click the link. You’ll find what you are looking for there. Remember, for example, that you can keep your phone number, whichever phone company you end up going with.

Get the right phone plan

 Why you shouldn’t buy a phone under contract from the phone company

There are two occasions in which people typically consider taking a phone under contract from the phone company.

  • Avoiding up front cost: First, some people need to avoid the substantial up front cost associated with the purchase of a modern smartphone. The more famous brands, Apple and Samsung can both cost you $1000 up front, no questions.
  • They’re just renewing their contract: Their existing contract has come (or is coming) to an end. Their phone company has inexplicably just become a great deal more interested in them. Part of the interest involves the phone company offering them a new phone – and an extension of the agreement they have in place now.

If you match either of these criteria – STOP!! Do not enter in to a contract. We’re calling bullcrap!

The key things you need to know about those free phones from the phone companies are:

  • There is no such thing as a free phone: There never was a free phone. The monthly cost of the plan that you are paying for incudes the repayments on the phone. When you sign a contract, you are obliged to cover at least the Minimum Total Cost. Before you leave, you may even need to contact your phone company to get your device unlocked. Remember, the reason they have become more interested in you again, the reason they want to re-contract you is so that you don’t leave them. The phone is a lure. If you do the maths you’ll find it is almost always cheaper to buy the phone and the SIM yourself.

The alternative – build the deal yourself

If there is a single piece of advice we can give you, it is to consider buying the phone outright and adding a SIM. Whether this ‘trick’ will save you money depends on the specifics of the deal. In the last 2 years, the calculations have changed. Increasingly, it looks like the phone companies do not want to subsidise phones in the future the way they have in the past.

  • This alone can save you up to 50% or more of what you’re looking for: Buying your phone outright and adding a SIM can save you 30% of the cost of the alternative contracted plan.

We explore the different options in which you can piece together a phone + SIM deal yourself, below. Alternatively, you can read our dedicated article to establish whether, in your unique situation, you will save money buying a phone outright, yourself and adding a SIM.

  • All the phones we show here are unlocked: One of the principals we’re espousing here, if you haven’t spotted it yet is tying together your own deal. To do that you will need an unlocked phone. Unlocked phones can be taken to any phone company you want to get a SIM from. Here’s more on what unlocked phones are and how you can manage them.

 Buy the right plan

Data is now the most critical aspect of any phone plan you’ll buy in Australia, be it prepaid or postpaid.  That doesn’t mean that people know how much they need in their phone plan of course which is where the problem begins.

In general terms, the newer the phone and the bigger the screen, the more data you’ll use each month. Consider these other factors when working out how much data you will require in a plan. There’s a trick to this which most miss. When you’re selecting your plan make sure you get enough data to cover your need but not so much you waste it. Most people buy way, way too much data and never use it.

  • Your average monthly data usage: As of 2017, if you have a phone bought in the last 2 years and it’s got a big screen, you probably need at least 3GB of data in your monthly plan.
  • You can find your usage history in many phones’ ‘Settings’: Often charts are used to bring this data to life.

data usage Android

data usage Android phone

Consider smaller phone companies

  • Smaller phone companies: We have covered the advantages of smaller phone companies (a.k.a MVNOs) hundreds of times on this website. The maths is simple. In almost every case the network you buy from a smaller phone company is exactly the same as the network you’d get from the big phone company. And then the plan is cheaper. Here’s an example :

Vodafone Prepaid $40.00 vs Boost $40

Prepaid month to month

  • Deal 1

  • Per Month

    $40.00

  • Voice

    Unlimited Talk & Text in Oz

  • Data

    Up to 9.0 GB

Network

Boost are now on the  Telstra 4G network !

  • Deal 1

  • Per Month

    $40.00

  • Voice

    Unlimited Talk & Text in Oz

  • Data

    Up to 9.0 GB

Network

Boost are now on the  Telstra 4G network !

  • You can trial the network before you buy: If you do have doubts about the network, and really, there’s no need to, then you can consider trying a SIM for a month, without moving your number over.

Enjoy free data

There are a couple of scenarios in which you can enjoy free data. If you are outside of a contract agreement with your phone company, you will end up with either a SIM only plan or a prepaid SIM.

Since you can leave those agreements at any time, phone companies know they have to fight to keep your business. The market drops the price of data very quickly. The result is that, over time, if you wait around and are prepared to move plans (either within your existing phone company or by taking a SIM from a new one and porting your number.

Avoid overage!

  • Know what ‘overage is’: Overage is the name given to the data you use on top of the allowance you get in your plan. With the big phone companies especially, ‘overage’ is charged at usually $10/GB. Some smaller phone companies charge differently. They will always clearly tell you what their scheme is. The way overage is treated has changed dramatically in the last few years. In the past, it was not uncommon for the telcos to rout you $100/GB. These days, you won’t be hit that hard. However, people’s behavior has not always kept up…..
  • Many people buy too much data: Before overage cost just $10/GB, charges for extra data could be extortionate. Many, many people got their fingers burnt with ‘bill shock’. Now they’re working through the ‘twice shy’ time.
  • Know how to manage your data: There are a bunch of apps out there including some very simple apps from your phone company which will tell you how much you’ve used. As you can see above and behind the link we provided, your phone will tell you, out of the box, how much data you are using each day. With prepaid plans, managed in the right way, you won’t be able to exceed your data allocation. We advise you check your phone plan’s data as often as you check your bank account.
  • Be prepared to revisit your decision in a few months: Data usage is increasing year on year. Most people nearly double the amount of data they use each 12 months. The plan that’s right for you in the middle of 2017, will likely not be right for you a year later.

You can find out more on the best way to help yourself in our article dedicated to helping you establish your unique data usage requirements.

Choosing Prepaid or SIM Only plans can help save you 50% too

  • You’ll probably want an ‘Unlimited Plan’: If you make one or fewer calls per day, (irrespective of the number you receive) you might want to consider a Pay As You Go plan. But that’s pretty much the only exception these days. For almost anyone else, an Unlimited Plan is probably the right choice. Remember, most plans are unlimited voice and SMS in Australia these days. Very few have even capped allowances for voice and SMS any more. If you are spending more than $20 a month then you’ll probably get unlimited voice and SMS. In practical terms, this is one less thing to worry about.
  • Consider both prepaid and postpaid / SIM Only plans: Prepaid plans are looked down upon by a small section of the population. We think it’s crazy to write them off. I run a phone comparison site and I have a prepaid SIM from OVO Mobile in my phone. The simple facts are that Prepaid deals are often better than their postpaid alternatives. Our advice is not to write either plan type off. In fact, there are so many factors pushing the Australian market to go the way of prepaid that we think 2017 could be its year.
  • Consider 12 month contract plans : Both Optus and Virgin Mobile have 12 month contract plans. If you find one at the right time, with bonus data added for the duration of the contract, these plans can be better value than prepaid. They also service a real need. A sizable chunk of the population will simply not check the competitive landscape and compare plans more than once a year.

Prepaid terms as low as a single day to test the network

We have a great deal of dedicated information on prepaid plans, and SIM Only plans. We also know that some of the fundamental ideas can be the hardest to grip. We also have an article to explains the difference between SIM Only, Prepaid and Month To Month agreements  if you need that help.

Get the right phone

Australia iphone users

If you want a brand new phone, go to Kogan

Kogan are an Australian mainstay these days. They are a reliable brand with a reputation for innovation and cut throat new phone pricing. Add in the competitive pricing edge for which internet companies are known and you can see why we buy most of our new phones through Kogan for this website.

  • They’re cheaper than the same phone bought in Australia: Kogan phones are often cheaper than you might pay for the same device purchased directly from the manufacturer in Australia. Kogan sell phones on the ‘International Market’ which means they look around different countries for the best price, buy in bulk, sell on the internet to avoid unnecessary costs and pass the savings on to you.
  • They may arrive with different settings: Kogan phones may come with international (often Chinese) default settings. They’re easy to swap, just change the language as part of the set up process.
  • Offer options you can’t always get here: You will find non Australian variants of some phones with international providers, too. Some device variants are not released in every country. Kogan can give you the chance to get a device you would otherwise be unable to.

We have a full review of Kogan Mobile’s hardware and their Prepaid SIM Only plans in our Kogan Mobile review.

Get a refurbished or second hand phone

Having decided to avoid a contract with your phone company in the pursuit of a 50% saving, you might like to consider a refurbished or second hand device. Not only are they cheaper, they might be a safer option than you originally thought.

  • They’re obviously cheaper: Second hand or refurbished devices can save you a lot of money on your hardware. Typical hardware discounts can be 30-50% on the price of a brand new, just released this year phone. Of course, the price you pay will vary depending on the age of the phone and whether their chassis has any blemishes. Consider Moose Mobile for refurbished devices or search the internet. They are increasingly common and you too can benefit from the number of iPhone that there are out there looking for a home.
  • You might even get a manufacturer warranty: Buy a refurbished device direct from the manufacturer or a reputable provider and you might even get a 12 month warranty with it. Warranties are increasingly common in refurbished devices which tells you everything you need to know. They’re as reliable as the real thing.
  • You can factory reset to clear everything off: Don’t worry about the previous owner having configured the phone in a way you don’t. The phone should be provided to you entirely wiped as if you had bought it from new. Worst case, any pictures they’ve taken or weird wifi preferences can be eliminated easily with a ‘factory reset’ which is always available in settings, whether you go with an Android or an iPhone.
  • You can replace the battery if you need to: Many people still do not realize that the battery can be changed ( by registered repair agents ) even on phones where the chassis is locked up tight. Parts like batteries are often replaced anyway in refurbished phones. However, if you want a new battery at any time, you can swap it out.
  • Other components like screens can be replaced: Whether the damage is done by you or the refurbished phone was like that when you got it, dents or scratches can be hidden with a case for the phone. If it’s really bad, any authorized repair center, often including the manufacturer will repair it for you. Of course, there will be a charge.

And of course, remember that you should sell the phone when you’re finished with it too. This will help you recoup even more of the money you could otherwise have spent. Keeping this in mind can help you pick the right phone in the first place. As they say, ‘Start with the end in mind.’ Generally, Apple phones hold their value better than their Android equivalents.

Consider cheaper Android phones

Overseas manufacturers offer top notch functionality at very affordable pricing. Some of these manufacturers make great phones. Most use the Android platform and, while you might not instantly recognize the brands, they do 80%-90% of everything you could expect from the highest end phones at a fraction of the cost. We’ve wondered at the value in the low end Android market for some time.

These phone manufacturers are a bit like the ‘brands’ at Aldi. They provide you with essentially the same product – they just don’t charge as much for it. The companies that do it are small in size at the moment but are growing fast. The minute you write down a phone specification, it’s out of date so we won’t show the specifics of the phones they have. But here are a few brands to look out for.

  • Xiaomi: Famed for building good hardware at low prices, Xiaomo is a Chinese manufacturer. Spend $200 – $300 dollars and you will get a phone which has essentially the same features and operating system as the current Samsung Flagship !
  • Oppo: Oppo’s range starts even cheaper – with devices from $50 – $300 on offer. Oppo have a couple years head start on Xiaomi and better distribution in Australia. You will see their devices in Optus stores and OfficeWorks, among other outlets.
  • Vivo: Vivo cost $300 – $400 and offer versions of Android hardware which appeal to high end users on a budget. Again, you’ll find them everywhere over here, including the Post Office.

Or you can try leasing a phone

Led by the USA, Australian phone companies have recently started dipping their toes in the water of leasing. Leasing options in Australia is already here. Financial arrangements exist in Australia for a company to lease phones to end users in large numbers so this scheme could be the start of something more all encompassing. Moose Mobile are one of the new phone companies which service this growing need.

Leasing provides people with a new phone, helps them split the cost in to manageable payments and leaves them free to move to new phone providers when they want to. You will end up paying more for the phone than if you’d bought it yourself of course. They have to cover the risk and the interest on the money they’re lending you to buy the device. But you will avoid that unpalatable up front cost.

Leasing is a serious option to consider if you are finding it hard to stump up the money to buy a new mobile phone. Here are your major options.

  • Telstra have a weird scheme which is essentially a contract: We don’t recommend that you go with Telstra for your leased phone. They have their own scheme.
  • Or consider real leasing: We recommend Moose Mobile, a smaller Australian phone company. Who will let you buy the phone from them with a simple monthly payment.

Australia Phone Ownership

keep your phone longer

 Keep your phone 6 months longer

  • Keeping your phone longer: The average amount of time that people hold on to their iPhones has increased an enormous 6 months in the last 2 years. Owners which do this are splitting the hardware cost of their investment over 30, not 34 months.

iPhone Popularity

We believe mobile phone contracts are a thing of the past

In summing up, we believe the way people buy phones is changing dramatically at the moment. Contracts, the agreements under which we have all bought phones for the last 20 years are just not the way people want t buy phones now. There are so many more options available now than there were even a few months ago.

DIY or ‘BYO’ phone plans and SIM deals are the way the majority behave. Above all else, picking the phone itself in the right way is the best method of reducing the total cost you’ll pay. Having a new phone is nice but having one which does 90% of the things a brand new product will give you is good enough for most. When you find out it costs half as much as the same thing under contract, many believe that this is the most sensible course. Whether you do it using a low end Android phone, a refurbished phone, a leased phone or a second hand one is up to you.

Smaller phone companies also offer pricing, especially on data, which beats the big phone companies hands down. In many cases, MVNOs (as they’re known in the industry) can save their users 50% on a monthly phone payment. Of course, having a healthy understanding of the amount of data you actually use and how much you will pay if you go over it will also pay dividends.

 Summary

how to save money on your phone bill info graphic

 

Neil Aitken

Having worked in 3 countries for 4 telcos on both voice and data products, Neil is in a position to give you the inside track. Get beyond the marketing messages to the best plan for you.