The True Cost Per Minute of Long Distance
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Articles > Business and FinanceThe True Cost Per Minute of Long Distance
by: Raymond A. Klesc
Mathematics is unerring. As a child we are taught that 2 + 2 = 4. This will never change and will always yield the same results; except when it comes to calculating you phone bill.
Most long distance carriers advertise their low rate per minute costs. However, before you can really make an informed decision as to which carrier offers the best value you need to consider all of the “other” costs that may be buried in the fine print. Read all of the restrictions and costs in detail then analyze these “added” costs against your specific calling habits. Only then will 2 + 2 truly equal 4.
For instance, many carriers will charge a monthly fee in order for you to qualify for their low rate per minute charge; while other carriers will impose a minimum monthly usage charges. If you fail to reach this minimum usage then you are charged added costs.
The key to getting the overall best value on your long distance is to review your monthly statements and analyze your calling habits. The key things to look for are the total number of minutes, call duration, for all of your long distance calls. Does this number change every month or is it more or less constant? Is there a particular state or states that you call more often than others?
Once you have this information at hand you then make detailed calculations to determine the true cost per minute of various calling plans. You need to be able to take the additional charges (monthly fee, minimums and so forth) and divide it by your usage (total number of minutes) then add that to your rate per minute. Only then will you have a true cost per minute of your long distance carrier or analyze the various plans from other carriers.
Let’s take a look at some examples and you’ll get a better feel for what I am saying. Here are three plans (“A”, “B” and “C”) for comparison with three different individuals:
Plan “A” - $0.04/minute, plus monthly fee of $5.95;
Plan “B” - $50.00 for 1200 minutes, plus $.07/minute over the 1200 minutes; and
Plan “C” - $0.10/minute with no other fees.
Now let’s look at three different users and determine which plan provides the best value.
Tania: Tania’s total annual long distance usage was 14,400 minutes, averaging 1200 minutes per month. However, her usage was not consistent with some months as low as 600 minutes and other months as much as 1,800 minutes. In her case we can calculate the three plans this way:
Plan “A”
600 min. months: ($.04 x 600) + $5.95 = $29.95
1,800 min. months: ($.04 x 1800) + $5.95 = $77.95
Her total bill for the year: (6 x $29.95) + (6 x $77.95) = $647.40
Total cost per minute: $647.40 / 14,400 = $.045/minute
Plan B
600 min. months: $50.00
1800 min. months: $50.00 + ((1800 / 1200) x $.07) = $92.00
Her total bill for the year: (6 x $50.00) + (6 x $92.00) = $852.00
Total cost per minute: $852.00 / 14,400 = $.059/minute
Plan C
600 minute month: 600 x $.09 = $54.00
1800 minute month: 1800 x $.09 = $162.00
Her total bill for the year: (6 x $54.00) + 6 x $162.00) = $1,296.00
Total cost per minute: $1,296.00 / 14,400 = $.090/minute
Clearly in Tania’s case plan “A” would be the best value for her money.
Chuck
Chuck also uses the same 14,400 minutes of long distance but his monthly average of 1,200 minutes is very consistent month after month. In his case we can calculate the three plans as follows:
Plan “A”
Each month: ($.04 x 1200) + 5.95 = $53.95
His total bill for the year: 12 x $53.95 = $647.40
Total cost per minute: $647.00 / 14,400 = $.045/minute
Plan “B”
Each month: $50.00
His total bill for the year: 12 x $50.00 = $600.00
Total cost per minute: $600.00 / 14,400 = $.042/minute
Plan “C”
Each month: 1200 x $.09 = $108.00
His total bill for the year: 12 x $108.00 = $1,296.00
Total cost per minute: $1,296.00 / 14,400 = $.090/minute
Clearly in Chuck’s case plan “b” would be the best value for his money.
John
John, on the other hand, used very little long distance every month. His total usage was only 1,200 minutes for the year and a consistent average of 100 minutes per month. In this case we can calculate the three plans in the following manner:
Plan “A”
Each month: ($.04 x 100) + $5.95 = $9.95
His total bill for the year: 12 x $9.95 = $119.40
Total cost per minute: $119.40 / 1200 = $.099/minute
Plan “B”
Each month: $50.00
His total bill for the year: 12 x $50.00 = $600.00
Total cost per minute: $600.00 / 1200 = $.50/minute
Plan “C”
Each month: 100 x $.09 = $90.00
His total bill for the year: 12 x $9.00 = $108.00
Total cost per minute: $108.00 / 1,200 = $.09/minute
Clearly in John’s case the best value is plan “C”.
So, here we looked at three different people and their calling habits looking at the same three calling plans with each one selecting a different plan for the best value. In order for you to get the best value out of any calling plan is to know your own specific telephone calling habits. Take the time to analyze your calling habits and you will be able to save money and get the best value for your money.
Thanks for reading… I hope it has given you something to ponder.
Ray Klesc
Global Value Connect
http://www.globalvalueconnect.com
Providing the best value in telecommunications products and services from leaders in the industry
*FREE eBook* – “Phone Bill Saving Tips for Home and Office” 40-page report packed with dozens of tips and ideas that will start saving you money immediately.
http://globalvalueconnect.com/Saving_Tips.htm
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