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06 September 20119 Comments by Jon M

Giffgaff price increase – call and text charges rise

giffgaff logoA sad day today – Giffgaff officially announced a pretty hefty price bump to their PAYG rates for calls and SMS. The tariff increase doesn’t go live until 6th October but it still makes a significant difference to their customers who don’t use the excellent value goodybags.

  • The price for texts has risen a whopping 50% as each one goes from just 4p each to 6p each.
  • Calls have gone up by 25% from 8p/minute to 10p/minute. This includes call forwarding.
  • All other charges such as voicemail, premium rate numbers, mobile data and goodybags have remained unchanged.

Giffgaff have blamed the price increase on Ofcom’s reduction in Mobile Termination Rates (MTRs) earlier this year which affects their profit margins. This was the same excuse used when ASDA Mobile increased their prices by the same amount and Orange’s rates rocketed in June, as well as Vodafone’s mass fee hike back in July. They also claimed it was needed to make the business more profitable.

Frankly, these reasons are a bit of a red herring and it’s a clear move to persuade more customers to move to the guaranteed income of goodybags. The product most affected by the MTR increase is the Hokey Cokey goodybag which remains unchanged. Texts are completely unaffected even though their price went up by the biggest percentage. It’s worth remembered that texts are also massively profitable for mobile companies even at just 4p each.

As for the profitability – Giffgaff is still an incredibly new company and it’s rare to recoup investments so early. They have also admitted that they are ahead of schedule for all their income targets. So that’s why it’s a sad day – it reeks a little of money grabbing and bait-and-switch now they’ve attracted a large userbase. It remains to be seen whether all the people leaving for cheaper networks will cause them to lose more income than the price increases gain.

Despite all this, we still have to commend Giffgaff highly. They, unlike any of the other networks, conducted a two week customer consultation to discuss the price increase. They didn’t spring it on their users unlike their rival networks and they listened to their users’ feedback. And even though Giffgaff might not have rock-bottom rates any more, we still argue that it’s probably the best value PAYG network. Some of the reasons are that, even though prices have gone up, you still get unlimited calls and unlimited texts absolutely free to friends and family on Giffgaff all day every day. This is an unbeatable offer and potentially saves huge amounts of money. Then there’s free credit with the payback scheme and the £5 joining bonus. What’s more their goodybags are some of the very best deals around and they have pledged not to increase their prices. Of course, for all the goodybags costing more than £10 you get truly unlimited data which is a fantastic deal.

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9 Responses to “Giffgaff price increase – call and text charges rise”

  1. pedro pereira 17 October 2011 at 21:52 Permalink

    I recommended a poll but they did not, do it due to the fact it would throw up some issues to them.

    As I said they where tallied up on kudos plus replies.

    Then why did you not suggest on the ideas forum the plan to better capitalize the company as you are describing it?

    and to add to trivia there where 970 individual posts, did you count them up and tallied the totals + kudos?

    and to make it clear I understand the percentages, however you did not read the posts I was talking about, to make that assumption it was calculated in percentages and f.y.i. goodybag users belong to the same network so their vote counts as much as P-A-Y-G so no one can discount their opinion.

    I am not trying to argue with you, as you have made good points and this is a very good discussion.

    I admit there was a very passionate discussion but did not read anyone calling names to anybody, and as always you cant please every one at every time.

    • Mobile Network Comparison 18 October 2011 at 14:31 Permalink

      We agree – this is a good discussion worth having. The main issue with the “consultation” was that it was deliberately buried to avoid most customers finding out about it until it was too late and it was steered by misleading or incorrect information. Despite this, most Giffgaff customers were against the rise. At the end of the day, customers are paying more when they didn’t have to and that’s a shame.

  2. pedro pereira 17 October 2011 at 18:48 Permalink

    Sorry your review of giffgaff about new price increases is very wrong,

    giffgaff had a major discussion on the forum about new prices, giffgaff only asked for 10p calls and 5p,

    Several in fact a great number of giffgaff users including me voted for 12p and 6p tariff we did not calculate 50% and 25% as you claimed.

    The final price was decided after about 140 posts by the users in the forum, that forum post was very extensive

    we want new services on giffgaff so in my case as a user I am willing to invest a 2p calls and 2p texts for giffgaff to deliver on new services

    The increase was calculated on +2p for texts and +2p for calls and voted for by the majority of users so scaremongering is not a good thing to write about my new network…

    • Mobile Network Comparison 17 October 2011 at 18:53 Permalink

      Firstly, Giffgaff neglected to inform their users of the consultation and then only ran it for a short amount of time so the vast majority of their users didn’t get a chance to have their thoughts heard.

      In any case, we’re not sure if you even read the same thread that we read. Users overwhelmingly asked for lower price increases (not that prices should go up when Giffgaff were already exceeding all their targets) and promises for no further increases that were not forthcoming.

      And we’re not sure exactly what you’re on about as it requires only the most basic maths to calculate the 50% and 25% difference.

      This looks alarmingly like it might be bait and switch but only time will really tell.

      • pedro pereira 17 October 2011 at 21:10 Permalink

        that is true because there where 154 pages to follow so it could not continue for longer, you are half right.

        And we’re not sure exactly what you’re on about as it requires only the most basic maths to calculate the 50% and 25% difference but i am trying to explain most of us did not use % some of us did but some of us did not, just because you can calculate % does not mean the discussions I was describing where calculated that way.

        you should have read the posts read my posts my suggestions had a full list of prices including how much they where in pence so the percentages is a mute point, it could have been worse some of those goody bag users asked for 16p minute and 10p here is some points I have gathered from the discussions

        two main camps the no to increases prices who did want to keep the old rate

        the yes camp which divided in three types and if anyone counted majority:

        1 was for the rate 10p calls and 5p texts

        2 The ones with more proposers was 10p calls 6p texts

        3 the ones who would have punished the PAYG customers with really huge increases the maximum they asked 24p calls 16p texts, I even suspect if they had the option of turning giffgaff into a goodybag only network they would of but they where a minority thank heavens.

        • Mobile Network Comparison 17 October 2011 at 21:16 Permalink

          Your understanding of maths and percentage increases is looking increasingly ropey. Don’t you understand that percentage increases are one and the same as pence increases? Either way, they are just as severe.

          Why would the opinions of goodybag users who the changes would not affect be especially relevant? It’s tantamount to asking 3 users to determine Giffgaff’s pricing. Yes lots of people wanted larger increases but if you’d done a poll of well-informed customers, you would have found that the majority would have wanted a permanent price freeze.

          The simple facts are that if Giffgaff has been managed competently, the price increase was wholly unnecessary. If it’s not, it shouldn’t be the customers that have to pay especially as alternative forms of funding are available.

  3. anonymous giffgaff user 7 September 2011 at 13:03 Permalink

    [Anonymous because I already had more than enough personal abuse for daring to comment on the giffgaff forums consultation]

    It’s hard to take seriously a “consultation” that explicitly excluded everything but “how much more should we charge for these 2 named items” from discussion. It was an opinion poll, pure and simple and extremely divisive by excluding any possibility of changes to bundles. giffgaff knew their bundle users would stand up and vote for others to subsidise their own use and surprise, surprise that’s exactly what happened.

    giffgaff have attracted large numbers of users with underpriced bundle deals and now need to find someone to pay for that. Very conveniently MTR reductions let them pretend that’s the cause. Ironically by raising out of bundle prices this way while my VOIP provider passes the MTR reduction on, it’s now become cheaper to use my landline than giffgaff.

    giffgaff is becoming bundle only, abuse it while it lasts. When the guaranteed funding expires in 3 years time O2 will shut them down, having learned from the experiment just how easy it is to manipulate customers into doing what O2 want.

  4. evad 7 September 2011 at 01:10 Permalink

    As a user of goodybags, I’m not *that* bothered by that increase, really. As long as goodybags are untouched AND free giffgaff calls remain, I’m not going anywhere.

    Other thing, you say “whopping 50% increase” but thing is that dramatic “whopping” wording would be appropriate to use if they increased, say 12p by 50% to 18p, rather than 4p -> 6p. I just don’t regard 2p increase per min/sms as “whopping”, that’s all. 🙂

    • Mobile Network Comparison 7 September 2011 at 01:35 Permalink

      We think it’s right to look at it from a percentage point of view – nobody just makes a single one minute call or sends a single text. If you send 80 texts a month it used to cost you £3.20 but will now set you back £4.80 – a “whopping” £1.60 or 50% increase. This can easily be extrapolated over a whole year of PAYG usage.

      The simple fact is people who don’t use goodybags will get far less for their top-ups or, alternatively, see substantial increases in their spending for the same amount of calls and texts. Someone who used to spend, say, £50/year will now spend between £60 and £75 instead.

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