Understanding cashback mobiles

In theory, cashback deals on mobile phones can be very lucrative for the customer, though with the increase in competition from various networks and retailers, the offers and conditions of contracts mobile phones and the incentives they bring, can be confusing to say the least.

Mobile phone tariffs and cashback
For those thinking of buying a new mobile phone or switching contracts, it is worthwhile considering the tariff that best suits you. The tariff is the network’s setting and for both contract and Pay-As-You-Go packages, dictates the cost of calls, number of free minutes (if any), and number of texts. However, the same tariff can vary depending on the hand-set, retailer and whether any cashback deals are offered.

The big discounts are from cashback redemption which has to be claimed by the retailer rather than the customer, though there has in the past been lots of controversy surrounding certain retailers about how reliable this method is, so it’s certainly worth giving careful consideration before making any contracted commitment. Mobile phone contracts have a tendency to be rather strict which is another reason to ensure you enter into the right deal; failure to pay bills on time can result in a breach of contract and, as such, means that any pre-arranged cash back deals become redundant.

For those who use fewer than 150 minutes of calls and 100 texts per month, then a Pay as you go will tend to work out cheaper. Contract phones can be substantially cheaper for those who use their phones on a more regular basis and have the added incentives of free upgrades, inclusive call packages; and the big advantage is that the caller won’t run out of minutes. The disadvantage is that the customer is essentially locked into the deal and these can prove costly.

If a contract package costs £30 a month for a minimum of 12 months, this would work out at £360 for that period. With cashback deals, the retailer might advertise the contract at £15 a month for the year. The customer would pay £30 to the network but then claim £180 in the form of cashback from the retailer in one or more instalments. Customers should be aware that these types of offers are designed to make the packages seem cheaper and encourage them to enter into a contract and for the network and retailer to therefore gain an additional customer. It is common for the cashback deals to be paid back in staggered instalments on a set month during the contract term.

Clarity and simplicity
There have been instances where customers have struggled to get the cashback from the retailer and only recently have trading standards cracked down on retailers who draw up complex contracts between themselves and the customer. It is advisable to read the terms and conditions of the retailer’s cashback policies carefully, fail to follow their procedures exactly and on time could mean you miss out completely and it is the retailer who gains rather than the networks.

Networks rely on retailers finding new customers for them and pay them a hefty sum when they sign someone up. A network might offer a retailer £400 commission for every new contract but then the retailer is free to negotiate their own terms of cashback offers thereafter. Essentially this is how most retailers make their money as they offer only £200 cashback to the customer, leaving a nice profit of £200 for themselves. Many retailers know that the hassle of posting bills off to the networks can be a hassle and many customers don’t even bother to make the claims so the retailer gets to keep all of the commission they earn from the networks, however, it is certainly worth making the effort to claim the cashback as in many cases the packages can cover a years worth of mobile monthly fees worth hundreds of pounds

Mobiles and cashback - key benefits
Another way to further the discount on mobiles is to buy online through a cashback website. These sites not only provide lists of the best value-for-money deals, but they too can offer cashback simply by introducing the customer to the retailer or network’s website.

Internet marketing can be much cheaper for the retailer and it makes sense to advertise in as many places as possible to ensure wide exposure to a world wide market. Retailers pay the affiliate cashback websites a commission for every customer who makes a purchase as a result of their introduction, ie, every time a someone clicks on a link on a cashback website and then goes on to make a purchase, the retailer can trace the site that provided them with a new customer. Rather than keeping all of the commission, the cashback website returns a large proportion of the cashback reward to the customer to ensure loyalty.

The rewards can vary from up to £45 cash back (useful for those who opt for a pay as you go rather than a contract where the handsets tend to be free), to a percentage of the total spend. One retailer offers 2.5% cashback on all deals which could be an added bonus on top of any cashback contracts they offer as well.

A comparison made on the different retailers found a host of incentives for both new and existing customers. Looking at a contract phone with same hand set each time, the packages varied: £12.00 line rental a month with an 18 month contract (£216.00 excluding bills); but for anyone who introduced a friend to the network, both parties would receive a cash back bonus of £30 each, with doesn’t include the £40 cash back reward just from ordering through the Cashback Club website.

Another offer included £35 a month line rental on a twelve month contract but with a host of different incentives including a choice of free gift (gifts varying from a free I-pod to a free satellite navigator), an impressive £250.00 cash back and £25 free gift for every friend recommended.

Some promotions run for a limited time but members can be sure to find the most competitive deals online, and with the added incentive of two lots of cashback, ordering through the cashback websites can prove very worthwhile.

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