A 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.