31 August, 2015
The Holy Grail of Prepaid Wireless Service
Summary: The Holy Grail of prepaid wireless is purchasing a prepaid wireless refill card at a discount, a total cost for the refill below the face value of the card. Buying a prepaid mobile refill card at face value is challenging enough with potential sales tax and wireless E911 fee. However, with a purchase on the internet and a promise to be a repeat customer, you can buy prepaid wireless refills for about five percent less than face value.
Introduction
Recall that in the Arthurian legends the Holy Grail, a cup or chalice, could provide happiness, wealth and power in abundance. As a result, many of King Arthur's knights embarked on quests through the countryside to find the Holy Grail and return it to Camelot. For prepaid wireless customers there is also an holy grail—purchasing airtime below face value. That's right, the holy grail of prepaid wireless is getting service for a discount. So, can we find the holy grail?
As Knights of the Round Table met with great challenges and horrible fates while searching for the Holy Grail, you might imagine that it would be similar for prepaid wireless customers. As we have already discovered, the true cost of prepaid wireless service is increased by sales tax and E911 fees. The cost of these taxes and fees raise the price of prepaid wireless service by eight percent, on average, across all states. While it seems like a fool's errand to search for prepaid wireless service at even face value, let alone a discount, the quest is attainable.
The first major challenge to address is state taxation. With the combination of state sales tax and E911 fees adding about eight percent (depending on the state) to the cost of prepaid wireless service, we saw previously that it was challenging to even break even on retail refill purchases. Since the tax burden is large, wouldn't it be nice if there was a way to shop without taxes....
That's what the internet is for, isn't it?
Let's then take to the internet as we try to find the holy grail for a monthly AT&T customer spending $30 monthly on her plan (that's curently unlimited talk and text for 30 days). This is the refill card that will serve as the basis of our quest, our grail.
Walmart
A common retailer to use for refill purchases is Walmart. Their stores are never far away, and the prepaid wireless refill displays are prominent in both the electronics section as well as around the checkouts. Walmart also operates Walmart.com. Can we find the grail there?
No. While Walmart.com does sell the refill in question via email delivery (no delivery charges), you'll see below that the purchase is still subject to taxes dependent on the delivery address.
The catch here is that online retailers who operate physical locations in a state must collect tax for sales to residents of that state, even when the sales are made online. So while we might be able to get the refill at face value at walmart.com, since they operate retail locations in all fifty states and Puetro Rico, we'll still be paying sales tax and E911 fees. No grail here.
Amazon
Alright, if it is the physical locations that are problematic at walmart.com, can we find an etailer that doesn't operate brick and mortar stores in most (or any) states? Amazon is probably the first name that comes to mind. They operate amazon.com and have grown from a bookstore to a selling platform over the last twenty-one years. Most importantly for us, they have grown by selling at a discount.
Searching amazon.com reveals that Amazon isn't in the business of selling prepaid wireless refills, at a discount or not. But, amazon.com is a selling platform, and many other sellers run their businesses solely in the Amazon Marketplace. Searching the Amazon Marketplace reveals that no Marketplace sellers offer the $30 refill card. However, one Marketplace seller does offer the $15 refill card for $13.50. That's a savings of 10% off the face value. The grail looks like it might be within our reach ... but then shipping charges rear up to pull the grail from our grasp. As illustrated below, there is shipping fee with each order (physical delivery charge) which negates the discount on the service.
No holy grail at Amazon. Maybe we will need to look to specialized etailers who deal in phone cards, mobile phones or gift cards to fulfill our quest.
CallingMart
CallingMart (callingmart.com) specializes in wireless refills, SIM cards and calling cards for both domestic and international service. With a focus on telecommunications service, maybe the holy grail can be found there.
Looking at the AT&T monthly plans listing at CallingMart, we see that they do indeed discount prepaid wireless service, and they do not collect taxes and fees. We have found the holy grail.
So, how low do they go?
The $30 refill card sells for $29.10. This is a 3% discount from the face value of the card (CallingMart does offer a larger discount for the purchase of the largest denomination in AT&T monthly refills. The $60 monthly refill card is discounted 5%. By changing your purchasing habits and buying two months of service at a time, you could increase your discount by 2%.). In addition, CallingMart offers a loyalty program to encourage repeat customers. The loyalty program provides 1% of your purchase in credit toward a future purchase. We'll assume customer loyalty with a future transaction and deduct that 1% from the total cost of service. Since we are making an online purchase, we'll be using a credit card (either directly or via PayPal) so we can assume our base credit card reward of 1% (you can do better). That brings the final discount line to $0.58 for a purchase price of $28.52. For $30 in prepaid wireless service, that is just shy of a 5% discount.
Service
$29.10
Loyalty Program
($0.29)
Credit Card
($0.29)
Total Cost
$28.52
Having found the holy grail of prepaid wireless, can we sweeten the deal? Yes, as mentioned above, there is a larger discount for purchasing the maximum denomination of service, conveniently for our example, two months of service at a time. For the $60 refill, the breakdown looks like this.
Service
$57.00
Loyalty Program
($0.57)
Credit Card
($0.57)
Total Cost
$55.86
Yes, that is $60 worth of service for $55.86, a savings of 6.9% off the face value. A small change in buying habits can increase the discount by another two percent.
While it isn't necessarily related to our quest, it is valuable to survey the other discounts offered for other wireless service providers at CallingMart. The deepest discounts are offered for AT&T service, but many other service providers can be sold at discount rates of 1 to 4%. There are other wireless providers, T-Mobile, who have trimmed their wholesale margins so much that CallingMart must charge a premium (currently 2%) to sell their service. Remember that the discount the consumer receives here comes out of the discount offered to sales agents on wholesale purchases. Margins are being trimmed throughout the industry.
Also, there is an affiliate program offered by CallingMart that provides another 0.5% reward for referral purchases, either as credit or cash. You can lower your costs by recruiting and supporting other customers at CallingMart.
Poverty Mobile does not participate in the CallingMart affiliate program.
Newegg
Now that we have found an example of the holy grail, the question becomes, "is it an anomaly, or are there other examples in the wild?". And if there are other examples, might they be equally, or more, attractive depending on the situation?
Newegg has operated newegg.com since the turn of the century. Having built a business from selling computer components, Newegg now offers a wide variety of consumer goods and services, with computer hardware still a premiere focus. Newegg does offer a full line of AT&T prepaid refill cards delivered via email. For single purchases, the refills are face value, but Newegg offers a 5% discount for "subscription" purchases. Subscription purchases are automaticlly recurring purchases with a variable frequency from 1 to 6 months (you are able to alter both the frequency and the specific date of delivery at any time after the subscription has begun. Subscriptions can also be cancelled following the second delivery).
So what does the holy grail look like for a subscription purchase at Newegg?
Service
$28.50
Credit Card
($0.28)
Total Cost
$28.22
That's $30 of service for $28.22, a savings of just shy of 6% on the purchase. The only catch is that you are required to make the monthly purchase again, at least once. However, with a prepaid monthly plan, the cycle of monthly purchasing is not a foreign concept, and automatic monthly delivery might be a key advantage for this service—maximum convienence.
With a subscription from Newegg, you are able to easy edit the quantity, frequency and delivery date through your Newegg account. There is also the option to skip the next delivery without altering, and having to reset, the details of your subscription.
Newegg is located in the state of California and does charge sales tax on purchases made by residents of California.
Newegg does run an affiliate program offering a 2.5% commission for sales generated via banner ads. Poverty Mobile does not participate in the Newegg affiliate program.
Conclusions
We have been able to find the holy grail of prepaid wireless service at a pair of etailers. With the low overhead, etailers are willing to pass along some of the wholesale discount inherent in prepaid wireless service. For an AT&T customer, that discount share tops out at about five percent. For other service providers, the discount is less, but still available. Using the internet to purchase prepaid wireless refills, provided your etailer does not operate a physical location in your state, bypasses sales tax and E911 fees, allowing you to realize the discounts offered for the purchase of gift cards.
So, like the brave Knights of the Round Table, go forth on your quest for the holy grail of prepaid wireless service. The object of your quest is out there and within your reach. And may your quest turn out better than it did for many of King Arthur's knights.