Question for Jannie

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Speedster

Speedster

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Jannie, reading between the lines on some of the other threads it seems to appear that you think 10c/MB is a sustainable price. I'm basing this assumption on your regular reference to under 10c not being sustainable.

My question is then simply this: If 10c/MB is a sustainable price why then is the OOB shark still chomping away at R2/MB (1900% premium) and why are we still paying the (seemingly exorbitant) prices found at the link below?

Here are a couple of examples: R9,25 for 8MB (1056% premium), R88 for R110 (700% premium) and so on. Surely there is then plenty room to bring down these bundle prices?

Or is this merely yet another regulatory failure happily allowing for economic profits to be made - in which case this question should be directed at ICASA?

http://www.vodacom.co.za/vodacom/se...cted=4_a_Bro_0_Bro_1220&ciFormat=default&ht=t
 
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zamicro said:
You are not really expecting an answer from Jannie?
Click to expand...

Actually, I am. Would love to hear what I'm missing in my little model. There must be some significant factors (of which I am completely unaware) to justify R2/MB.

EDIT: I'll give him time to finish his boxing match with Morkhans first.
 
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Jannie never responds to posts regarding pricing.
 
rorz0r said:
Jannie never responds to posts regarding pricing.
Click to expand...

In that case I'd settle at least for an acknowledgment of the question. Something like "Thanks for the question, unfortunately pricing is not within the scope of my responsibilities."
 
Speedster said:
Jannie, reading between the lines on some of the other threads it seems to appear that you think 10c/MB is a sustainable price. I'm basing this assumption on your regular reference to under 10c not being sustainable.

My question is then simply this: If 10c/MB is a sustainable price why then is the OOB shark still chomping away at R2/MB (1900% premium) and why are we still paying the (seemingly exorbitant) prices found at the link below?

Here are a couple of examples: R9,25 for 8MB (1056% premium), R88 for R110 (700% premium) and so on. Surely there is then plenty room to bring down these bundle prices?

Or is this merely yet another regulatory failure happily allowing for economic profits to be made - in which case this question should be directed at ICASA?

http://www.vodacom.co.za/vodacom/se...cted=4_a_Bro_0_Bro_1220&ciFormat=default&ht=t
Click to expand...

Hi, sorry did not see this. The vodacom sub-forum is VD's domain and I seldom visit it as Mr. VD is always on top of stuff here.

The "10c" thing became an easy term in the 'unsustainable' thread or more accurately we started speaking of "sub-10c" as the rates we're discussing varies from as low as 3.6c/MB to around 7c but probably lower than the current best of 18c you can get from Vodacom.

When a company constructs a suite of products (like a range of data bundles) you have to balance your pricing so that it's as fair as possible over the range. Those who buy lots want the best possible price but to do that you need to implement a sliding scale. You'll see this in any industry. If you buy smaller quantities (say of nails), the price will be higher than when you buy 'in bulk'. So you'll see a sliding scale but, for the vendor, it must balance out so that selling the whole range still makes sense, i.e. the average GP is still decent.

This is standard retailing and exactly the same applies with the bundle prices.

In terms of OOB, it's calculated into the pricing for the same reasons. This actually opens up the question; if you want to see price reductions come through, what is more important to you in-bundle or oob? Where would you want to see the reductions applied?

For those who do go OOB, we created the 'Advanced' bundle a long time ago, so that your OOB=IB.
 
jannievanzyl said:
Hi, sorry did not see this. The vodacom sub-forum is VD's domain and I seldom visit it as Mr. VD is always on top of stuff here.

The "10c" thing became an easy term in the 'unsustainable' thread or more accurately we started speaking of "sub-10c" as the rates we're discussing varies from as low as 3.6c/MB to around 7c but probably lower than the current best of 18c you can get from Vodacom.

When a company constructs a suite of products (like a range of data bundles) you have to balance your pricing so that it's as fair as possible over the range. Those who buy lots want the best possible price but to do that you need to implement a sliding scale. You'll see this in any industry. If you buy smaller quantities (say of nails), the price will be higher than when you buy 'in bulk'. So you'll see a sliding scale but, for the vendor, it must balance out so that selling the whole range still makes sense, i.e. the average GP is still decent.

This is standard retailing and exactly the same applies with the bundle prices.

In terms of OOB, it's calculated into the pricing for the same reasons. This actually opens up the question; if you want to see price reductions come through, what is more important to you in-bundle or oob? Where would you want to see the reductions applied?

For those who do go OOB, we created the 'Advanced' bundle a long time ago, so that your OOB=IB.
Click to expand...

Thanks Jannie. I agree 100% with the idea of a sliding scale and for lowering IB rates. I'm just concerned that the slide has to be such a steep one. I mean, 1900% premium is pretty stiff for OOB. I use about 150mb on my phone per month so that's roughly R70pm (I buy a 300MB bundle to last for two months). I feel I'm being excessively penalized for my low usage as I am paying a significant premium - 363% - over your effective sustainable price. We could then say your marginal cost of providing my next MB is R0.10, yet I'm paying R0.46 for it (your marginal revenue). Surely that has to equate to monopolistic rent seeking?
 
So Jannie, if everyone bought 2Gb bundles for R389, used up the full 2GB and didn't go OOB, then you're effectively saying Vodacom would make a loss?
 
Speedster said:
Thanks Jannie. I agree 100% with the idea of a sliding scale and for lowering IB rates. I'm just concerned that the slide has to be such a steep one. I mean, 1900% premium is pretty stiff for OOB. I use about 150mb on my phone per month so that's roughly R70pm (I buy a 300MB bundle to last for two months). I feel I'm being excessively penalized for my low usage as I am paying a significant premium - 363% - over your effective sustainable price. We could then say your marginal cost of providing my next MB is R0.10, yet I'm paying R0.46 for it (your marginal revenue). Surely that has to equate to monopolistic rent seeking?
Click to expand...

Not sure how you got to the 363% but you're right in that you pay around 46c per meg which is less than the average price of all the bundles up to 3GB. So you're about in the middle of the 'sliding scale' just like your bundle is in the middle of its sliding scale.

If you graph the c/MB against bundle size (how I typically look at the scale), you'll see the c/MB drop quite quickly to about 300M and then from 600M it starts to flatten out.
 
SaiyanZ said:
So Jannie, if everyone bought 2Gb bundles for R389, used up the full 2GB and didn't go OOB, then you're effectively saying Vodacom would make a loss?
Click to expand...
It would for sure make all the beanies commit Hara-Kiri. ;)
 
jannievanzyl said:
Not sure how you got to the 363% but you're right in that you pay around 46c per meg which is less than the average price of all the bundles up to 3GB. So you're about in the middle of the 'sliding scale' just like your bundle is in the middle of its sliding scale.

If you graph the c/MB against bundle size (how I typically look at the scale), you'll see the c/MB drop quite quickly to about 300M and then from 600M it starts to flatten out.
Click to expand...

I get the methodology and all that, I don't get how you justify the magnitude of the premiums.
 
jannievanzyl said:
Hi, sorry did not see this. The vodacom sub-forum is VD's domain and I seldom visit it as Mr. VD is always on top of stuff here.

The "10c" thing became an easy term in the 'unsustainable' thread or more accurately we started speaking of "sub-10c" as the rates we're discussing varies from as low as 3.6c/MB to around 7c but probably lower than the current best of 18c you can get from Vodacom.

When a company constructs a suite of products (like a range of data bundles) you have to balance your pricing so that it's as fair as possible over the range. Those who buy lots want the best possible price but to do that you need to implement a sliding scale. You'll see this in any industry. If you buy smaller quantities (say of nails), the price will be higher than when you buy 'in bulk'. So you'll see a sliding scale but, for the vendor, it must balance out so that selling the whole range still makes sense, i.e. the average GP is still decent.

This is standard retailing and exactly the same applies with the bundle prices.

In terms of OOB, it's calculated into the pricing for the same reasons. This actually opens up the question; if you want to see price reductions come through, what is more important to you in-bundle or oob? Where would you want to see the reductions applied?

For those who do go OOB, we created the 'Advanced' bundle a long time ago, so that your OOB=IB.
Click to expand...
Jannie, between your CEO and yourself you can't decide whether it is is easy or difficult to calculate the cost of broadband (he says it is complicated and you reckon it can be done in a simple Excel spreadsheet)

So, I decided to do the spreadsheet thing, as suggested by yourself, and these are my results:

Bundle Price Cost/Gb
1.2 289.00 240.83
2.3 389.00 169.13
3.0 520.00 173.33
5.0 989.00 197.80
10.0 1989.00 198.90
20.0 3899.01 194.95

Please then Mr Broadband Vendor, kindly explain the cost/Gb of bundles larger than 2.3Gb, based on your comprehensive explanation of sliding scales, bulk buying, etc.

Vodacom must have some incredibly sophisticated and accurate models to come up with R3899.01 for 20Gb. What makes that bundle 1c more expensive than just R3899?
 
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Antonf said:
May I suggest you use Excel rather than a white board?
Click to expand...
You know what Antonf? I've patiently tried to debate the various topics with you and others on this forum but I've had it with your attitude and your constant attacking myself. It's childish and immature and really just shows your lack of a decent upbringing.
 
jannievanzyl said:
You know what Antonf? ...you and others on this forum ...really just shows your lack of a decent upbringing.
Click to expand...

Chill dude, No need to insult some ones parents. Its rather rude and disgusting. So he has an opnion about your company that's not favourable. I appreciate that you represent your company here (unless I'm mistaken) and as such a little professionalism would be much appreciated.

Anyway....OP has a good point. The prices are very exorbitant and also because one sees similar prices across all 3 networks one starts to consider colusion. The high end bundles are extremely expensive.

IMO Vodacom spends too much time upgrading thier network than actually providing what customers want eg. decent customer care/approprites price per product.
 
I think he was/is with us to....hey, at least you tried to discuss the matter, i just said no comment to him and others, cause like it or not? we as reps are powerless to do much of anything about the pricing structure.

Just remember that a post like your last one is a bit harsh, you're gonna end up as hated as i am:D customer might not always be right, but he's always king:whistle:
 
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