Cut your Mobile Phone Bill: Use Prepaid Phones

Friday Aug 27th 2010 by Stuart J. Johnston
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It may seem a little counterintuitive, but prepaying for mobile phones can save serious money, one small business advisor suggests.

As the recession drags on, many small businesses are desperate to cut overhead any way they can.

To which small business maven Liz Franklin says that you can cut significant fat out of your monthly budget by dumping expensive mobile phone contracts and, instead, switching over to unlimited prepaid phones.

"Before you start firing people or introducing morale-killing cuts in health insurance and other benefits, why not first put the squeeze on your wireless phone bill," Franklin said in a statement emailed to Small Business Computing.

With prepaid phones, small business owners can have the benefit of unlimited talk minutes and Web access, as well as text messaging. And that's available at rates that could save a small business anywhere from $250 to $800 a year, or about $45 to $60 per month, according to Franklin.

"With telecommunication costs being the third or fourth largest expense overall for a business, this is a big waste target for many small companies," said Franklin, who authored the book, "How to Get Organized Without Resorting to Arson." Franklin has also written a regular column for the Sacramento Business Journal since 2005.

Prepaid Phones or Contract Plans

Most mobile phone customers opt for what are referred to as contract-based wireless plans. That is, for a set regular fee each month, the customer gets a pre-specified number of talk minutes, a certain number of megabytes or gigabytes of data downloads or uploads, and text messages, either per text or for a flat fee.

If you have a business that requires a lot of phone time, though, if you go over the minutes you've paid for under your contract, the charges for each extra minute may turn out to be draconian. In such cases, that one or two-year contract could become a liability.

In contrast, prepaid wireless plans let the customer "fill up" the phone's account with credit towards use of the phone. The more you pay in, in advance, the longer you can talk or surf or text. When the phone gets low on cash to fuel it, you can add more -- and there's no contract.

Going for the "pay as you go" model may be less convenient in some respects, of course. When the phone runs out of minutes, it goes dead -- so it's a good idea to keep an extra phone or two around. 'Hidden' Costs

Franklin insists that not all hidden costs turn out to be unexplained charges buried in the back of a contract-based cell bill.

Hidden costs can also include time that the proprietor or designated employee spends issuing checks to reimburse employees for their phone bills, as well as locating lost phones, keeping track of cell phone contracts, and even arguing with wireless operators about errors on the bill.

"Billing errors ... occur in as many as 7 percent of phone bills," Franklin added.

There is a trade off. Small business owners who opt for prepaid phones end up primarily with a choice of less expensive handsets than on a contract that might be attached to an iPhone, BlackBerry or other mobile smartphone -- but then, saving money is the name of the game. Isn't it?

Despite their whiz-bang techno attraction with a high "coolness" factor, the fact is that many small business owners and their employees simply don't need them.

"Do you really need an iPhone? Do you really need a Blackberry with all the latest bells and whistles? If you can afford to pay an extra $60 or $80 a month just for the privilege of owning (and probably under-utilizing) a mobile smartphone, then you probably don't need to be reading ... about how to cut your small business overhead," Franklin said.

Franklin offers other tips for saving money on the phone bill as well.

For instance, she said, consider getting rid of land lines -- sometimes referred to as POTS (plain old telephone service) -- that is, wired line phones. By going completely wireless, among other things, that's one less check to cut each month.

"The smaller your business, the more likely it is that you can cut your costs significantly by shifting everything to prepaid phone service for as little as $45 a month. It's not for everyone, but it is an option worth exploring to see if the fit is right for you," Franklin added.

Another tip, and another reason for keeping more than one prepaid phone handy -- unlimited talk minutes can often be applied to long distance calls, which could save a small business a small fortune over time.

"If your firm does a lot of outbound calling of existing clients or prospects, an unlimited prepaid phone is a great way to keep down expenses."

Despite all of her haranguing and cajoling, however, small businesses are not quickly catching on to the fact that they can save serious money by cutting the wireless contracts.

"Interestingly, few small businesses appear so far to have made the switch to prepaid wireless, even though the number of consumers who buy such cheaper wireless service now outnumbers those who are still paying through the nose for contract-based cell phones with often painful early termination fees," said Franklin.

Stuart J. Johnston is a contributing writer at InternetNews.com, the news service of Internet.com, the network for technology professionals. Follow him on Twitter @stuartj1000.

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