Cell Phones

# Does Fido Promo Device Pricing Calculation Make Sense?

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• Jun 26th, 2021 4:25 am
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[OP]
Member
Apr 23, 2011
414 posts
Montreal

## Does Fido Promo Device Pricing Calculation Make Sense?

When you guys see a phone advertised on fido.ca as:
https://imgur.com/a/8fJzBeP

Would you naturally think it's \$24.99 per month + local tax rate?
For example: \$24.99 (advertised monthly cost) + \$3.74 (QC sales tax) = \$28.73 monthly after tax.
Total device cost after 24 months of financing is \$28.73*24=\$689.52

Actually Fido calculates it differently.
\$53.54 (monthly cost) + \$8.02 (QC sales tax) = \$61.56 (monthly cost) - \$28.55 (monthly discount) = \$33.01 monthly after tax.

In reality the total cost of the device after 24 months, after tax is \$792.24

That is an increase of \$102.72 or an additional 15% to the advertised price.

I ended up miscalculating the total cost of the phone initially and just wanted to make people are aware of the math Fido will use.
It isn't as simple as advertised promo device price plus sales tax...

Personally I think it's misleading. What do you guys say?
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25 replies
Deal Fanatic
Nov 14, 2003
6448 posts
LaLaLand
MartletMedia wrote: Would you naturally think it's \$24.99 per month + local tax rate?
Yes
MartletMedia wrote: Personally I think it's misleading. What do you guys say?
Not misleading. In North America, tax(es) are not normally included in the price displayed.
Banned
Dec 17, 2019
228 posts
Montreal
Doesn’t make sense because:

33.01 / 1.14975 = 28.71

28.71 != 24.99
I'm a customer at Public Mobile and VoIP.ms!
Jan 13, 2014
2928 posts
Calgary
They get away with it because of the "after bill credit" line. Otherwise there really would be no need for them to show the normal price.

I know someone's going to say "but that's unfair!" and I tend to agree, but sadly that's how it is. They are very clear about this when you click "View Details"
Fido Payment Program: 0% APR on approved credit with a Fido Payment Program Agreement (FPPA) and an eligible Fido mobile plan. FPPA based on full price less any down payment plus taxes (excluding promo credits, if applicable, which are applied monthly on your bill for as long as your FPPA is in place)
Think of it this way: I give you \$30 store credit to use at my store. You buy something that's advertised at \$60 (which the item is - regardless of if I tempt you by saying "it's only \$30 after the credit I'll give you." You're still paying taxes on the \$60 item!
[OP]
Member
Apr 23, 2011
414 posts
Montreal
batcave wrote: Yes

Not misleading. In North America, tax(es) are not normally included in the price displayed.
I fully understand that taxes are not included in in the advertised prices in NA.
For me, the misleading part is how Fido calculates the tax on the advertised device price.
Like the poster above pointed out Fido gets away with it thanks to their T&C fine print.
I would think it's safe to assume the average customer sees \$24.99 and automatically thinks there is only sales tax on the portion.
Not many people would know that you have to add the taxes to the full price of the device, which is \$53.54, and then subtract the difference discount from the after tax figure.
In reality the \$24.99+tax per month turns out to be \$28.71+tax per month.
Devhux wrote: They get away with it because of the "after bill credit" line. Otherwise there really would be no need for them to show the normal price.

I know someone's going to say "but that's unfair!" and I tend to agree, but sadly that's how it is. They are very clear about this when you click "View Details"

Think of it this way: I give you \$30 store credit to use at my store. You buy something that's advertised at \$60 (which the item is - regardless of if I tempt you by saying "it's only \$30 after the credit I'll give you." You're still paying taxes on the \$60 item!
Your example completely makes sense but I don't think it exactly apply to this case?
To use your example, perhaps I'm wrong, if someone is buying something at \$60 they would expect to pay tax on the full \$60 because that is the "advertised price".

What Fido is doing. For example: You go to your local store and see an item on "sale" for \$100, marked down from \$200. Would you expect to pay the tax on the \$100 or \$200? Obviously on the \$100 only because that's is the price your paying...
Nobody pays tax on the full price of an item that is on sale at stores...Unless i'm missing something.... But like you said it's the ""after bill credit" line...

Fido.ca is showing \$53.54 crossed out and displaying \$24.99 and in brackets says "after bill credit". I think almost anyone would interpret that as "the phone is on sale for \$24.99 and i'll just pay my local tax on that \$24.99".

I'm also surprised they get away with it as Quebec has some strict laws on advertised price transparency that doesn't confuse consumers...

I don't think many people would realise what the "after bill credit" truly means and in this case the \$24.99 becomes \$28.71 per month plus tax.
Anyways.. That's how I seen it and just wanted to make fellow RFD members aware incase they aren't already.
Dec 20, 2015
4459 posts
Toronto, ON
Devhux wrote: They get away with it because of the "after bill credit" line. Otherwise there really would be no need for them to show the normal price.

I know someone's going to say "but that's unfair!" and I tend to agree, but sadly that's how it is. They are very clear about this when you click "View Details"

Think of it this way: I give you \$30 store credit to use at my store. You buy something that's advertised at \$60 (which the item is - regardless of if I tempt you by saying "it's only \$30 after the credit I'll give you." You're still paying taxes on the \$60 item!
Not sure if this is the case for all retailers, but usually when I get store credit or any promo's its deducted before the SUBTOTAL.
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Deal Fanatic
Nov 14, 2003
6448 posts
LaLaLand
MartletMedia wrote: I fully understand that taxes are not included in in the advertised prices in NA.
For me, the misleading part is how Fido calculates the tax on the advertised device price.
Like the poster above pointed out Fido gets away with it thanks to their T&C fine print.
I would think it's safe to assume the average customer sees \$24.99 and automatically thinks there is only sales tax on the portion.
Not many people would know that you have to add the taxes to the full price of the device, which is \$53.54, and then subtract the difference discount from the after tax figure.
In reality the \$24.99+tax per month turns out to be \$28.71+tax per month.
Here's how I calculate it,

Total device price is \$1285 + tax \$192.75 = \$1477.75
Total monthly cost over 24 month with discount and no tax is \$24.99
Total monthly cost over 24 month with discount and tax is \$28.55
Total discounted price over 24 months is \$28.55 x 24 = \$685.20
Subtract the total device price from the total discount, \$1477.75 - \$685.20 = \$792.55 , this is your total cost of ownership for the device.
Divide total cost of ownership by 24 months, \$792.55 / 24 = ~\$33.02. This is your monthly cost including taxes of the device at full price.
Monthly cost without difference in taxes = ~\$28.72 (marginally higher than \$28.55 because of rounding and how I calculated it)

It is this way because the carrier buys the device at full price (but probably a bit lower) and tax at that price was paid at acquisition. You are financing the device at 0% interest along with a discount. If it were like financing a car, there are two entites involved, the company selling you the widget and the company financing the widget. It seems like a scam but maybe isn't because of the difference in taxes. I imagine it is somewhere in between because I'm pretty sure Apple would not sell carriers a phone for such a large discount.

I don't think it is misleading and I think it is fair. You always should read the ± to understand before signing up.
Member
Feb 29, 2020
289 posts
How much is your Bill Credit on your latest invoice?
MartletMedia wrote: When you guys see a phone advertised on fido.ca as:
https://imgur.com/a/8fJzBeP

Would you naturally think it's \$24.99 per month + local tax rate?
For example: \$24.99 (advertised monthly cost) + \$3.74 (QC sales tax) = \$28.73 monthly after tax.
Total device cost after 24 months of financing is \$28.73*24=\$689.52

Actually Fido calculates it differently.
\$53.54 (monthly cost) + \$8.02 (QC sales tax) = \$61.56 (monthly cost) - \$28.55 (monthly discount) = \$33.01 monthly after tax.

In reality the total cost of the device after 24 months, after tax is \$792.24

That is an increase of \$102.72 or an additional 15% to the advertised price.

I ended up miscalculating the total cost of the phone initially and just wanted to make people are aware of the math Fido will use.
It isn't as simple as advertised promo device price plus sales tax...

Personally I think it's misleading. What do you guys say?
Deal Fanatic
Mar 10, 2018
5846 posts
does it matter?
batcave wrote: Here's how I calculate it,

Total device price is \$1285 + tax \$192.75 = \$1477.75
Total monthly cost over 24 month with discount and no tax is \$24.99
Total monthly cost over 24 month with discount and tax is \$28.55
Total discounted price over 24 months is \$28.55 x 24 = \$685.20
Subtract the total device price from the total discount, \$1477.75 - \$685.20 = \$792.55 , this is your total cost of ownership for the device.
Divide total cost of ownership by 24 months, \$792.55 / 24 = ~\$33.02. This is your monthly cost including taxes of the device at full price.
Monthly cost without difference in taxes = ~\$28.72 (marginally higher than \$28.55 because of rounding and how I calculated it)

It is this way because the carrier buys the device at full price (but probably a bit lower) and tax at that price was paid at acquisition. You are financing the device at 0% interest along with a discount. If it were like financing a car, there are two entites involved, the company selling you the widget and the company financing the widget. It seems like a scam but maybe isn't because of the difference in taxes. I imagine it is somewhere in between because I'm pretty sure Apple would not sell carriers a phone for such a large discount.

I don't think it is misleading and I think it is fair. You always should read the ± to understand before signing up.
exactly. it is fair. There is no confusion.
"Laws for thee but not for me!" I will keep on jet-setting around the world. spend as much as I can. Enjoy as much as I can. Do as I do not as I say. I used to pay for my vacation until I met my hero.
[OP]
Member
Apr 23, 2011
414 posts
Montreal
Out of curiosity I sent a link to Fido’s page with the iPhone offer to a few people and asked them to tell me what they would be the total cost of the phone after tax. Every single person said about \$689. These were all tech savvy people....

This is a cell phone forum on RFD and I guess a portion of the crowd here might be familiar with the proper taxation on the discounted cell phone offers. The average consumer would expect to pay tax on the \$24.99 and not the full price of the phone.

Should you read the terms and conditions? Yes you should. Do most people read every single T&C? Probably not.... Is that Fido’s fault? No. Can Fido advertise the cost of the phone in a better way? Probably.

My point is, that at the end of the day, most people interpret \$24.99 as the sale price and expect to pay tax on that portion only. This is how they are used to paying tax in everyday shopping.
Deal Fanatic
Jan 18, 2010
7713 posts
It was Telus who started this bs practice and now everyone is doing it.

Telus also stated pricing devices over MSRP (against the wireless code) and everyone else is now doing that too.

Incompetent CRTC run by corrupt, retired big3 executives don't do anything, they take whatever big3 say at face value. The telecom industry in this country is in such a sad, disgusting state.
Member
Feb 29, 2020
289 posts
MartletMedia wrote: ... This is a cell phone forum on RFD and I guess a portion of the crowd here might be familiar with the proper taxation on the discounted cell phone offers. The average consumer would expect to pay tax on the \$24.99 and not the full price of the phone.

...

My point is, that at the end of the day, most people interpret \$24.99 as the sale price and expect to pay tax on that portion only. This is how they are used to paying tax in everyday shopping.
So the full price of this Apple iPhone XS 64GB is \$1285.00 + taxes right? So \$1477.43 Taxes included I’m I correct?

So \$1285.00 / 24 Months Fido Payment Program= \$53.54? Plus taxes= \$61.90 for the original monthly Fido Payment Program financing?

Fido currently advertise a \$28.55 monthly saving offer during the 24 monthly agreement Isn’t? Can you tell us if this \$28.55 monthly credit showing on your Fido invoice is before or after taxes?
Deal Fanatic
Mar 10, 2018
5846 posts
does it matter?
MartletMedia wrote: Out of curiosity I sent a link to Fido’s page with the iPhone offer to a few people and asked them to tell me what they would be the total cost of the phone after tax. Every single person said about \$689. These were all tech savvy people....

This is a cell phone forum on RFD and I guess a portion of the crowd here might be familiar with the proper taxation on the discounted cell phone offers. The average consumer would expect to pay tax on the \$24.99 and not the full price of the phone.

Should you read the terms and conditions? Yes you should. Do most people read every single T&C? Probably not.... Is that Fido’s fault? No. Can Fido advertise the cost of the phone in a better way? Probably.

My point is, that at the end of the day, most people interpret \$24.99 as the sale price and expect to pay tax on that portion only. This is how they are used to paying tax in everyday shopping.
Nope. point is wrong. The never said sale price. They clearly said price after bill credit. What you think it should be and what they state is different. If you interpret wrong then you are wrong.
"Laws for thee but not for me!" I will keep on jet-setting around the world. spend as much as I can. Enjoy as much as I can. Do as I do not as I say. I used to pay for my vacation until I met my hero.
[OP]
Member
Apr 23, 2011
414 posts
Montreal
DeJesus wrote: So the full price of this Apple iPhone XS 64GB is \$1285.00 + taxes right? So \$1477.43 Taxes included I’m I correct?

So \$1285.00 / 24 Months Fido Payment Program= \$53.54? Plus taxes= \$61.90 for the original monthly Fido Payment Program financing?

Fido currently advertise a \$28.55 monthly saving offer during the 24 monthly agreement Isn’t? Can you tell us if this \$28.55 monthly credit showing on your Fido invoice is before or after taxes?
Yes, the full price of the phone is \$1,477.43 after QC sales tax.
Yes, the full price monthly financing cost is \$61.56 after QC sales tax.

I did not get my bill yet but according to fido rep the price after tax will be \$33.01.
This means that the \$28.55 discount is applied after tax which is inline with Fido's terms.

The true cost in QC before sales tax is \$28.71 for 24 months and not \$24.99
Deal Fanatic
Nov 14, 2003
6448 posts
LaLaLand
MartletMedia wrote: Yes, the full price of the phone is \$1,477.43 after QC sales tax.
Yes, the full price monthly financing cost is \$61.56 after QC sales tax.

I did not get my bill yet but according to fido rep the price after tax will be \$33.01.
This means that the \$28.55 discount is applied after tax which is inline with Fido's terms.

The true cost in QC before sales tax is \$28.71 for 24 months and not \$24.99
You are probably right that it should be \$24.99 plus tax. When you get your bill, if it is the higher amount, contact the call centre and complain because they will probably give you back the difference.

However, it may come in at the lower amount, you never know!

EDIT, I went on apple.com to see how much this phone sells for. I see it is not for sale anymore and can't compare it to any retail price. However, you are basically paying \$600 plus tax for this phone over two years. When you look at the big picture, that is a pretty good price for an iPhone. Not the latest or the most storage, but probably meets the needs of most people. I think that's what Fido is going after by selling this phone at a 'discount'.

The marketing had changed somewhat over the years at carriers. I've never bought a phone from a carrier because they used to give away phones for free, but that was in the time of three year contacts. I did this in 2012 with Telus when I got a Samsung S3 from them. I got it free, but I paid \$70-\$80 per month for service. Over 36 months, my total cost of the contract was \$2500-\$3000, with a free phone.

I switched to prepaid after that and buy my phones outright. I pay about \$15-\$25 per month for my mobile service. Two years ago, I paid \$1100 for a Galaxy S9 but a dual SIM model and 256GB of storage. I'll use it for three years. That works out to a total of \$1600-\$2000 over three years and about \$50 month. Less if I factor in that I sold my Galaxy S7 for \$400.

The point is, you might be saving some money on the phone but they are getting you by over-charging you on the monthly service. The monthly service fee is what really burns the hole in your wallet. Complain about that and you might be saving money.
Last edited by batcave on May 24th, 2020 12:24 pm, edited 3 times in total.
Member
Feb 29, 2020
289 posts
My understanding is as per the www.fido.ca website the promotional credit is before applicable taxes...

So the \$28.55 monthly credit is before taxes... So with taxes your credit end up being \$32.83.

Therefore, take your device charge of \$61.90 minus the Fido Promo Bill Credit of \$32.83= \$29.07 / Month.

Is that make sense now?
MartletMedia wrote:
I did not get my bill yet but according to fido rep the price after tax will be \$33.01.
This means that the \$28.55 discount is applied after tax which is inline with Fido's terms.

The true cost in QC before sales tax is \$28.71 for 24 months and not \$24.99
[OP]
Member
Apr 23, 2011
414 posts
Montreal
DeJesus wrote: My understanding is as per the www.fido.ca website the promotional credit is before applicable taxes...

So the \$28.55 monthly credit is before taxes... So with taxes your credit end up being \$32.83.

Therefore, take your device charge of \$61.90 minus the Fido Promo Bill Credit of \$32.83= \$29.07 / Month.

Is that make sense now?
No. The the monthly credit is applied after tax, not before, \$33.02 is the cost of the iPhone Xs after tax in QC.
You can call/chat with Fido and they will confirm this figure.
Member
Feb 29, 2020
289 posts
Ok then, I’m pretty sure you’ll be able to review everything on your next invoice.
MartletMedia wrote: No. The the monthly credit is applied after tax, not before, \$33.02 is the cost of the iPhone Xs after tax in QC.
You can call/chat with Fido and they will confirm this figure.
Member
Feb 29, 2020
289 posts
Is this make more sense now?
Newbie
Jun 24, 2015
36 posts