We just finished up a project with a customer and saved them about 32% off of their existing carriers plan. There were several areas where they were paying too much but the glaring one was the “Bundled” long distance.
Here is how it works. The carrier gets your T1 business and with that, they are going to provide you these great long distance rates. Let’s say that you were paying 3.5 cents a minute for long distance. This is not a terrible rate but certainly not great. The carrier comes to you with their “Super Turbo 10,000 Plan” that gets you a bundled block of 10,000 minutes for $260.00 a month. That is 2.6 cents a minute so you are saving the company over 25%! This is great, your boss is going to love you, right?…..right? Unfortunately in this scenario the likely answer is, NO!
The fact that your bundled rate is calculated at 2.6 cents a minute is true and also a good per minute price. Here is the rub; you have purchased 10,000 minutes whether you use them or not and to make matters worse, if you go over the 10,000 minutes, you pay a different rate. Yes, it’s higher.
Here was the situation for the customer that we helped. They had 2 offices and each had the 10,000 minute plan at $260.00 a month. We took typical months bills and this is what we learned.
Location A used 6,200 minutes and Location B used 14,700 minutes. Location A used well under the 10,000 minutes but since they were on the “Super Turbo 10,000 Plan” they paid for all of them. Location B got a great deal on the first 10,000 minutes but the overage cost them plenty. See the math below.
Location A: $260 / 6,200 minutes = 4.1 Cents Per minute (oops)
Location B: 2.6 Center per minute for the first 10,000 and 4.4 cents per minute for the overage. Net result is 3.1 cents a minute (oops again)
The net/net of this is that we don’t recommend the “Bundled” long distance.
