Price-for-Life

T-Mobile is claiming that the price for its fixed-wireless access (FWA) is locked-in and will never be raised. In the pricing world, that kind of offer is referred to as a price-for-life, although T-Mobile didn’t use that term. This is the kind of idea that comes from marketing folks because it’s a gimmick that makes it easier to sell. But there are some long-term consequences of offering a guaranteed price forever. That tactic would be impossible for a fiber provider, but the average customer doesn’t understand cellular networks well enough to dispute that kind of maneuver. But there are other reasons why price-for-life is a bad idea. The number one issue is inflation. The main problem I have with the price-for-life concept is that it provides an easy path for the marketing department to make sales and earn sales bonuses today while pushing lower margins into somebody else’s lap in future years. My main objection to price-for-life is that it conveys a message to consumers that runs against the philosophy of most small internet service providers (ISP). Most small ISPs pride themselves on offering fair rates all of the time, which makes it easy to favorably contrast themselves with the big ISPs that constantly run special pricing promotions. There is one counterargument to be made in favor of price-for-life. There is value in a customer that never churns. Even if a customer delivers less margin every year by hanging on to a price-for-life product, that customer is delivering a huge accumulated return by paying for a product for a decade or two.