A Thought about Profit

[Master01]

I was talking to a sprint salesman and he said that sanyo or sprint can't remember which is losing money on these phones as they are being sold for a loss rather than a profit. I was wondering as to how much of a hit is sanyo taking by making these phones? This is the million dollar question - how long will the supply last in the US once the phones hit the stores, any ideas???

[Scoot]

well with a retail price of 349 (i think) and sprint isn't losing any money i don't think sayno would let them lose any money but i could be wrong
sprint will give you a free or almost free phone cuz they get paid on the monthly service and the 2 year agreement you sign.
i don't see how either one of them are loosing money on the phone.... unless alot of ppl aren't keeping it

[Matt]

That's the salesmans way of trying to make you feel sorry so buy Sprint.

Losing money I bet.

:eyeroll:

[Wayne 1]

Scoot,

Do you have any idea of how much Sprint pays Sanyo for the M1 or whatever phone? If so will you share with the gang? :fingers:

[SprintLord]

i know that its over 300. hardly any markup

[jaytv]

cough...$320...cough

[dabro]

well with a retail price of 349 (i think) and sprint isn't losing any money i don't think sayno would let them lose any money but i could be wrong
sprint will give you a free or almost free phone cuz they get paid on the monthly service and the 2 year agreement you sign.
i don't see how either one of them are loosing money on the phone.... unless alot of ppl aren't keeping it

If you want to look only at the cost to Sprint of the handset itself, vs what they sell it for in these 2 yr commitments, Sprint loses money on most of the units they sell. Of course they make it up in monthly recurring charges. While I'm sure Sprint works with Sanyo to bring that cost down as much as they can through design & feature decisions, etc., Sanyo is most likely not losing money producing these phones, and is probably making a reasonable profit.

[PokerFace23]

i dont see how sprint could be paying 320 bucks for the m1 (let alone any phone) when retailer parties sell phones for cheap, since that is how they get paid by sprint. like the katana for example. i'm sure national retailers arent' paying 200+ for it but yet the 3rd parties were giving them away for free during the xmas holidays.

so now, how much is spring really paying for the phones from the manuf?

[utwarreng]

Sprint can afford to pay that much for the phones, and still give them away reasonably cheap because of the amount of money they make from the monthly contracts. If you take a $200 hit (about average for a new customer after $150 instant rebate, and whatever other rebates are there for new subscribers) for each new user that's one-time $200 million hit from signing up 1 million users.

But you then factor in that those same 1 million people have just signed contracts, the cheapest of which is $29.99/month for 24 months ($720 over 2 years). These customers are now on a network that at this point just requires routine maintenance, not just building new infrastructure. You've netted a minimum of $520 over 2 years per customer. Factor in that a lot of customers' bills are over $50/month, and you're making quite a healthy profit.

Making the phones cheap makes your business very attractive to the customers who want to have the latest and greatest without breaking their initial bank book. Then you also add in addons such as Vision/texting service that cost them almost nothing per month to provide, where they make almost $15+ in pure profit, and you really start raking in the money. Not to mention overages and additional charges which are just free gravy money.

[Wayne 1]

Cellular companies have a sweet deal. They have the laws behind them which allows them to hook people for a one or two year contract. Plus unlike the standard long distance land line deals of old such as with AT&T in which you didn't pay if you didn't use it.........cellular customers pay the contract price every month!! It makes for a consistent revenue stream for the cellular companies, sweet! :lol: ;)

[cirruslyloud]

Where I bought my M1, I dealt with the manager of the building. He was searching all his resources to get me a phone in the sotre by xmas. He succeeded and showed me what his cost was....$325. which is what he charged me. i love this phone. the M1 rocks!

[dabro]

i dont see how sprint could be paying 320 bucks for the m1 (let alone any phone) when retailer parties sell phones for cheap, since that is how they get paid by sprint. like the katana for example. i'm sure national retailers arent' paying 200+ for it but yet the 3rd parties were giving them away for free during the xmas holidays.

so now, how much is spring really paying for the phones from the manuf?

They make a profit on phones they sell for list. The phones sold when a customer commits to a 2-yr deal, however, are sold for less than Sprint paid for them. Of course, it's worth it to them because they can make the money up, quickly, through selling the services.