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  • WRITTEN BY Jorge Rojas POSTED ON July 26,2013

Upselling is a profitable marketing strategy used by virtually every for-profit business. One industry that stands out as “Masters of the Upsale” are mobile device sales organizations. One of the most popular add-ons is the smartphone protection plan, commonly referred to as “smartphone insurance.” Are smartphone protection plans worth the extra expense?

Every mobile device manufacturer and carrier has different terms with their smartphone protection plans, and prices vary with each make and model, but on average, a protection plan will run you around $5 a month. Five measly dollars, that’s not too bad, right? Careful, this is exactly what the Master of the Upsale want you to think. Five dollars a month, x 12 months, x a 2 year service contract, and you will be set back a cool $120.

Whether $120 makes you blink or not, this comes down to your perspective and your economic status; although, if you’re seriously considering a protection plan, then it’s probable that your financial situation plays into this. Maybe the most logical way to look at this equation is to compare the total money spent buying your phone, with the price of a new replacement phone. When looking at a protection plan from this angle, it’s important to realize that, just because your phone cost you $199, doesn’t mean that a replacement phone can be purchased for the same amount.

New smartphones are offered at a discounted price because they come with a service agreement, which carriers make more money off of than the sale of the phone. You can see the price of the phone without the contract listed below the advertised price in small print. You may be shocked to discover that buying a smartphone without the contract will cost you 2-3x more.

The device price with or without a service plan is important to consider; because, if you take a $199 phone, and compare that to the $120 you will spend on a protection plan over two years, then those two numbers will seem close enough to make the risk of not having a protection plan worth it. However, when you compare the $120 figure, with having to spend $600 to replace your phone because you’re locked in a contract, then $5 a month begins to look reasonable.

Another factor you will have to consider is the depreciation rate of your smartphone. When a new smartphone model is released, it’s a hot commodity and will continue to be until the next model is released…usually at the end of your 2 year service agreement. Whenever a newer model than what you are using is released, then the value of your smartphone will drop harder than that one time it fell out of your pocket and smashed into the sidewalk.

When you purchase a smartphone, and you are considering going with a replacement plan, do some market research and figure out where your device is in its life cycle. The newer your phone is, the more likely you will want go with a replacement plan. You might even be able to cancel your protection plan the closer you get to the end of your service contract. For example, let’s say you have six months left on your service contract; you can then cancel your protection plan and risk it for six months to save money. If your phone breaks, you can limp by on the cheapest phone available until your contract expires. You can then sign up for a new contract and get the latest phone at a discounted rate, now stop and pat yourself on the back for beating the system.

Lastly, you will want to consider how deep the mobile device protection plan goes. Does it just cover replacements, or is it like a warranty and repairs are also covered? Tektonic can help you with support on many of the most popular models of mobile devices. Before you commit to an upcharge that will add up, talk to us first. There is plenty of room in our IT service contract to cover your company’s mobile devices; and did you know that many of the same great managed IT services that are available for your workstations are also available for your mobile device? Call us at (416) 256-9928 to learn more.

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