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T-Mobile Raises Prepaid Phone Prices Again

Until a few months ago T-Mobile's own online store at prepaid-phones.t-mobile.com was one of the best places to shop for a T-Mobile compatible prepaid phone. It sold the carrier's branded phones for the same prices or even less that what amazon.com or big box stores like Target and Walmart charged. Best of all, phones on the site frequently went on sale or came with a free airtime refill.

That all changed when T-Mobile launched its "UNcarrier" strategy in late March. At that time T-Mobile.com raised all its prepaid phone prices by 20%-50%. About the same time T-Mobile started bundling a refill card with each phone. Feature phones came with a $10 card and smartphones with a $50 card. The refill cards were charged at full price and could not be removed from the order. T-Mobile also removed all the links to the prepaid section of site from the t-mobile.com homepage except for a little "Pay in advance" link at the bottom of the page.

Effective this week, T-Mobile raised their phone prices again by adding a $10 charge for a SIM card which, like the bundled refill, can't be removed. T-Mobile's phones all used to come with a SIM at no extra charge. Now even current T-Mobile prepaid customers who already have a SIM are forced to purchase one. In addition, the sole remaining link to the prepaid plans and phones was also removed from the homepage this week.

It's pretty clear that T-Mobile is doing everything it can to steer visitors to its site away from prepaid toward postpaid.

I applaud T-Mobile's recent postpaid changes which included lowering plan prices by removing phone subsidies and  no longer requiring a credit check or a contact for customers who pay full price for a phone or bring their own phone.  T-Mobile postpaid is now a better value than prepaid for customers with can put two or more phones on a family plan and need unlimited voice and messaging.  But prepaid is still a better deal for individuals and for families if all or some of their members are light users who don't need a lot of minutes, messages or data.

It almost looks like T-Mobile is trying kill off prepaid entirely. However, I don't think they are. The T-Mobile website is a channel they control completely. It makes sense to steer visitors toward postpaid, which is still more lucrative than prepaid or T-Mobile, largely because many postpaid customers will lock themselves into a phone purchase contract rather than buying a phone outright.

On the other hand, I believe that T-Mobile is more than happy to pick up additional revenue by selling prepaid plans and devices through the retail channel where it can reach customers who don't shop online or prefer to pay with cash.

The bottom line is that smart shoppers should avoid the T-Mobile site for prepaid phones. There are much better deals elsewhere. Here are a couple of examples:
  • The popular LG Optimus L9 Android phone is $300 with SIM and $50 refill on the T-Mobile site. The same phone, when it's not on sale, is $199.99 with SIM at Amazon.com and  at Target stores and is often sale priced for under $180 at both.
  • The basic Samsung t139 flip phone is $68 with SIM and $10 airtime card from T-Mobile. The same phone is $29.99 with SIM at Walmart.com and in Target stores.
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  1. Dennis:

    Did you check Boostmobile.com? Web special is LG F7 going for $40 off. What gives? Phone was just release.

    The point being it's a very competitive market for prepaid customers. Why would get a dated Samsung phone from Tmobile when you get a recently released LG phone for $260 from Boost.

  2. Dennis: I forgot to mention that S3 is $50 off at Boostmobile in case you didn't want the LG F7.

    As I have stated in the past Boostmobile, Virgin Mobile are struggling to correctly price their phones.

    1. I saw the S II and F7 deals and added them to Prepaid Phones on Sale This Week - July 14 - July 20 first thing this morning.

      Actually, I think Boost and Virgin are executing a deliberate and planned strategy with phone prices. Launch phones at a high price and then generate buzz with immediate and frequent price cuts and sales. They also subsidize their low and mid priced phones a little more than the other operators to gain customers and use incentives like shrinkage to retain them.

    2. The problem with frequent price cuts is buyer's remorse. That's not the right way to build customer loyalty.

      Also, these frequent cuts condition the buyers to wait for a real deal and let the first adopters overpay.

  3. I believe MetroPCS will become Tmos prepaid which is why they'll slowly phase it out

  4. If I had a guess as to T-Mobile's strategy, it's that T-Mobile wants MetroPCS to be the prepaid arm of its offerings a la Sprint and its multi-brand strategy.

    1. Maybe but the major carriers seem to be moving to having multiple prepaid brands:
      Sprint As You Go, Boost, Virgin
      AT&T GoPhone, Aio, Cricket
      T-Mobile prepaid, SmartTalk, MetroPC

      The "named" brands (Sprint As You Go, AT&T GoPhone, T-Mobile Prepaid) are the premium brands the others are value brands with throttling, no roaming etc.

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