Sunday 25 September 2016

Charlie Weston: A problem with bundles is they make us lazy

'A problem with bundles is they make us lazy. They're superficially attractive but when broken down may not be such a great bargain'

Published 18/03/2016 | 02:30

Bundling telecoms packages can be tempting, but sometimes the old-fashioned route of ringing around for the best individual deals proves to be cheaper. Picture posed by model
Bundling telecoms packages can be tempting, but sometimes the old-fashioned route of ringing around for the best individual deals proves to be cheaper. Picture posed by model

THERE is a danger that we are being bamboozled by bundles. This is where a number of products or services are sold together as one, with the selling point that it is cheaper than if you buy the services individually.

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Bundling has become popular when it comes to the sale of insurance products, energy, telecoms/TV and in banking. But just comparing many products and services individually has become highly complex because we actually have too much choice, so working out if a bundle is actually good value has become an issue.

Mobile phone plans and health insurance are two areas where there has been an explosion of choice.

If some of these services are then bundled in with others it gets next to impossible for ordinary householders to work out if there is any value to be had from signing up for the bundle.

Often a bundle deal is made up of a low-profit commodity-type product, like broadband, with other higher profit generating items included in the deal.

The jargon is the industry for the profit generating item is an RGU - a revenue generating unit.

Take telecoms. Everybody wants broadband. But there is so much competition that broadband now has a flat price, more or less, regardless of what you use.

You can get a decent broadband package for €40 a month, according to Simon Moynihan of price comparison site Bonkers.ie.

But then, say, you decide it is good value and convenient to bundle in a TV package and a mobile phone deal with the broadband.

TV has a flat price too, but let's say you want to watch a subscription channel to see a movie. That could cost you an extra €5.

Then there's pay-per-view events, premium box sets etc. So you could easily end up paying way more than the €40 that you signed up for with TV.

The same goes for the phone service, depending on the plan of course.

The telephone or mobile aspect of the bundle is good value, as long as you stick to the conditions of the deal.

Go outside what you get as part of the bundle and you get clobbered.

This means that these revenue-generating units have the potential to generate additional revenue that the flat broadband connection does not.

The other problem with bundles is that they make us lazy. They are superficially attractive, but when broken down into their individual units they may not be such a bargain.

For example, it is sometimes cheaper to get your electricity from one provider and household gas from another. But how many people break down a bundle into its individual components to see if you would not be better buying the services individually?

Few, it seems.

A study by economists in Britain's University of East Anglia and Newcastle University found that consumer inertia and price complexity bamboozles people.

This means we stick with poor value default plans and bundles instead of scouring the market for value and alternatives.

Time is a big issue for many people.

And with many of us claiming that we don't have enough time, it seeems, that we are - at times - our own worst enemies.

Irish Independent

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