I was talking to my dad the other day about our cable TV service. We use the same provider, so we were both dismayed (but not surprised) when we both received a letter in the mail from our cable company letting us know of a rate increase. This is something that usually comes out around this time of year. My dad got a note that his service was going up $3 a month, while ours was going up $8 per month.
The letter blamed rate increases from content providers, which is a pretty standard reason that they’ve given the last few notices.
While talking, my dad did a quick set of math that was pretty eye opening. He did some research and found that our cable company has roughly 800,000 accounts. A $3 month increase per month is $2.4 million extra charges coming in each month. Multiply that by twelve to look it over an annual basis, and you’re coming close to $30 million dollars.
That’s just the extra money, and I actually think that’s higher since you figure we were getting an $8 increase. Even if the average increase was $5 per customer per month, that’s $48 million per year of additional revenue! Somehow I doubt that the content providers are getting $48 million dollars. Surely some of that money is staying in house. Yes, I’m sure they have raises for their employees and that there are costs associated with the infrastructure and such, but still, that’s a pretty good pot of ‘extra’ money to work from!
I took it one step further and started thinking about the total revenue. Our company is privately held by a venture capital firm, so we have no idea about these numbers, but figure the average bill for services is $100 per month. That’s $1,200 per year and if you multiply that out by the 820,000 accounts they have, that works out to $984,000,000!
Almost a billion dollars in revenue for a company with less than a million customers.
And our cable company isn’t even one of the BIG companies. Imagine Comcast, who at one point I read had over 18,000,000 accounts, which works out to be in the tens of billions of dollars from cable and internet services (nearly $22 billion to be exact).
These are just staggering sums of money to me to provide the ability for people to sit down and watch TV, or surf the net, or nowadays, make phone calls.
It makes you realize why they offer specials to lure customers in. Each of those customers provides a pretty decent chunk of revenue, and if they can escalate the customer to a higher price it becomes a pretty good amount of money, and if you multiply it by the number of customers that these companies have, well, it’s almost obscene.
Playing the discount game
That’s why I think it’s more important than ever to get the best deal that you can. Simple reason being, these companies are not hurting for money, and they can afford to give you a discount. Now, get this straight, they can’t afford to give everybody a discount, but that’s the thing. Not everybody is going to ask.
So, if you’re paying full price for cable service, it’s time to hop on the phone and get your discount.
Trust me, the cable companies can afford to give you one. All they hope is that you don’t ask.
Readers, are you getting any discounts on your cable bill or do you jump around providers to get introductory deals as a regular thing?Copyright 2014 Original content authorized only to appear on Money Beagle. Please subscribe via RSS, follow me on Twitter, Facebook, or receive e-mail updates. Thank you for reading.