What’s the Plan? Is it time branded mobile gave customers more options to pay?

I heard about an interesting discussion the other day.

Initially it sounded a little counter intuitive, but the more I thought about it the more I appreciated the value of questioning the status quo and wondered if we do it enough as an industry?

Take buy now pay later options which have exploded over the last decade, they are serving a entire generation who see the credit card as an expensive financial relic but still want to be able to pay their way.

In Australia at least one MVNO has flipped the script by offering a long expiry ‘pre paid’ data plan into a product paid off in 4 instalments.

That suits a certain customer segment and that’s why it exists as an option but this got me thinking, why do we so rarely give a month-to-month mobile customer the option to pay six or twelve months upfront, at a discount, on the same plan they already have?

Pick almost any other subscription you pay for and you will find a small toggle near the price.

Monthly or annual?  Sometimes quarterly. Our customers have become accustomed to that across other subscription verticals – so why not mobile?

Does pay your way defeat the point of a monthly subscription, or is the customer always right?

When Forrester asked consumers how they prefer to pay for subscriptions, close to 70 per cent chose monthly, mostly for the freedom to cancel and manage their budget, but the same research found the ones who did choose annual almost always did it for a single reason: a discount on a service they knew they used anyway.

The discount is the driver obviously. Offering it with no saving and it will clearly fall flat; attach a genuine reason to fat up bulk cash and a valuable segment will say yes.

In their landmark study of mobile and internet customers, Paying Too Much and Being Happy About It, Anja Lambrecht and Bernd Skiera documented the flat-rate bias: consumers routinely pick a flat, prepaid tariff even when pay-as-you-go would have cost them less.

They are buying certainty, driven by an insurance effect against a surprise bill, a dislike of the mental taxi meter that ticks with every use and a habit of overestimating what they actually consume.

Then comes the part that should make any telco lean in. The same research shows that once a customer settles onto a flat or prepaid tariff, they tend to stay, even when a cheaper option is in plain view. Commitment hardens into habit.

Sell it as a price lock – people love certainty in uncertain times.

There is a sharper way to market it than just a new payment option.

Just this week my provider increased my plan cost by two dollars a month.

We can all appreciate when wholesale costs rise they get passed through to customers in some form.

A purchase option to pay for six or twelve months flips the positioning of a larger outlay into a price lock product: pay upfront, hold your rate, stay insulated from the next round of increases.

With price rises consistently the number one reason people cancel a subscription, a promise not to move the goalposts for a year or more is a persuasive offer.

A flexible hybrid that’s worth considering

Australia already has long-expiry prepaid but those are a data bet as much as they are a  billing choice: pay a large sum for a fixed annual allowance and if you burn through it early you are back at the recharge screen. The smarter version keeps the best of both: commit for six or twelve months at a better price, but release the data monthly rather than as one big bucket.

They get the discount and the price lock without the all-or-nothing cliff.

Each renewal is a natural moment to personalise a message, reward loyalty, or float a sharp offer for their next term. It does make revenue a little harder to forecast, but that same flow of data teaches you real behaviour over time, including who is looking likely to churn.

Strip it back and none of this is really a billing mechanic. It is a marketing play. Pay monthly, six-monthly or yearly is a differentiation lever, and in a market getting more competitive by the day, any lever like that deserves a long, hard look.