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TracFone to Drastically Cut Dealer Comissions on Airtime Sales


TracFone Wireless is notifying its dealers that it's planing to cut commissions on airtime sales from the current 12% to between 5% and 8.5%, effective April 1. Dealers who do activations and get a high percentage of repeat refills from the same customers will get 8.5%, airtime only dealers and ones who don't have enough repeat refill business only get 5%. The cuts apparently apply to all TracFone brands sold through independent dealers including PagePlus, Simple Mobile, NET10 and Telcel America in addition to TracFone itself.

These commission reductions are going to be hard on independent dealers already reeling from the pressures of online competition and the rapid expansion of AT&T's Cricket and T-Mobile's MetroPCS franchises.

I've been hearing complaints from dealers who were already unhappy with TracFone for texting their customers encouraging them to top-up online on a TracFone owned site and offering them discounts for signing up for autopay. I expect to see dealers dropping TracFone in favor of more dealer friendly MVMOs.

The already high attrition rate among dealers is likely to increase. I realize that many PrepaidPhoneNews readers are online savvy and probably don't use prepaid dealers for their refills. However, dealers are am important part of the prepaid ecosystem. They provide mobile service to customers who prefer to shop locally and/or may not have Internet access or bank accounts. Losing dealers will be a blow to the communities they serve, and fewer TracFone dealers is likely to hurt TracFone in the long run.

Online shoppers will be affected too. If the commission cut goes through, expect to see all those 5%, 6% and sometimes 10% discounts on TracFone airtime from online dealers disappear.

24 comments:

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  1. Will this negativity effect the eBay $9 prefunded simple mobile sims?

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    1. Probably not. The prefunded SIMs are made possible by high activation commissions which, as far as I know, are not changing at this time.

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    2. This is wrong. If you do not have the repeat business. Over a 60% renewal rate on activations, then the spiffs will go away for the dealer.
      People who buy prefunded sims rarely renew. If they do not renew, the dealer will no longer get spiffs, and therefore cannot offer the huge discount anymore. These will be gone in a month.

      Greg
      Prepayrefill.com

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    3. It will be effected. In order for dealers to qualify for the spiffs in the future, they have to have a 60%+ renewal rate on their activations. Since prefunded sim buyers rarely renew, dealers will not be getting those spiffs when they sell to these customers. These will be gone in the next month unfortunately.

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    4. Haven't the cheap prefunded Simple Mobile SIMs been on eBay for a year or more? Is the 60% refill requirement new or did TracFone change something else recently to block those sales?

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    5. Are you still selling them this month Greg? I haven't bought a prefunded sim since December but I have a trip in late April where the extra data would be handy.

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  2. I'm sure this will leave Kitty Wireless reeling somewhat.

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    1. Nope. Puppy any the two new mvno sales will pick up most of the loss. And she will cut our club discounts.

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    2. Kitty continues to offer incentives for Pp customers to move to Puppy Wireless. And she is signing up dealers for her two new MVNOs, MyTime Wireless and Boom! Mobile. Dealers will own 25% of renewals of lines they originate, even if the customer refills through the MVNO or another dealer! That is compelling. MyTime offers plans on all 4 networks. Kitty is seling Boom! plans on Verzion for now, but they also offer other network plans. I am sure Kitty is trying to get all Pp customers to switch.
      Am Movil may find that cutting out dealers will backfire in the long run.

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  3. It really seems that TracFone, in a desperate attempt to maintain profit margins, is willing to perform a scorched earth policy to their dealers. The heart of the problem isn't dealer commissions, but their poor customer service. Unlike the market of five years ago, the big four now have their own vigorous presence in the prepaid market. Also, they have lowered their postpaid plan prices which has made an already very competitive marketplace even more cutthroat. Finally, TracFone's business practices have alienated a market segment that they simply cannot afford to loose.

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  4. Tracfone runs a tight ship. Very tight.

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  5. America Movil and their horrid customer "service" with the complete disregard & distain they repeatedly and continually display towards their customers cannot die soon enough.

    Carlos Slim does not need your money (& now is greedily squeezing dealers), don't do business with America Movil brands.

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  6. Carlos Slim just keeps getting greedier.

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  7. It is a new requirement for the 60%. Stars today unfortunately.

    Greg

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  8. Those margins may be enough for Target and Walmart to keep selling refill cards. If so, I don't think the small indies dropping them is going to hurt Tracfone much.

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  9. With in a month all of our customers will be ported out.
    Dealers will do what is needed to stay in business.
    And the smart ones will not allow tracfone to kill there repeat refill commissions which keep dealers in small markets able to pay bills and to stay open.
    Sad but good by PagePlus

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    Replies
    1. I do not get it they would rather lose 500 customers and all profit from those lines than keep there dealers.
      In small rural market the customers have a relationship with the dealer not with PagePlus.
      People do not want to change where they pay there bill.
      They are more than happy to keep there local business open.
      And if moving to a new provider is the key to that they are happy to do that.
      PagePlus's lose is Selectel's gain.
      Business as usual for the dealer.

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  10. Here are my alternatives to replace all Tracfone brands with carriers that offer good customer service and pricing at various usage levels:
    1. AT&T network: AirVoice, Consumer Cellular, Puretalk.
    2. Sprint: Kajeet, MyTime, Real, RingPlus, Ting.
    3. T-Mobile: MyTime, Ting, T-Mobile Prepaid, Truphone.
    4. Verizon: Expo, Puppy, Selectel.
    Who would you pick to replace all the Tracfone brands?

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    Replies
    1. Who else roams nationwide on Verizon for less than $100 a year?

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  11. We only have good Verizon coverage in our area.
    Att is spotty and the reset just are not here.
    I had Selectel and Envi to choose from.
    Envi from what I heard targets your customers worse than PagePlus so that is how I made my choice.

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  12. Greg,
    Can you confirm the no spiff for the silver tier tracfone dealers ?

    it was supposed to happen early april but as of yet has not happened.

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  13. There are still plenty of Simple Mobile $40 simcards for $10.

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  14. bump for Put Prepay Refill news

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    Replies
    1. I live in alabama this is so sad for small businesses like mine I am very concerned about this situation I don't know How much longer I will stay open with only 5% when I was making 12% comissions on page plus and is almost all I do.

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