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cammyloon
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Price Increases 2024 - How will they be applied?

Hi.  Like others, Virgin has gifted me a hefty increase in my monthly bill (around 28%).  I've no idea how Virgin have calculated this ridiculous increase.

The situation is bad enough this year.  But at least we can cancel if we're not happy.  Next year, we'll be tied to our contracts even after Virgin increases prices.  

So, what increase should we expect?  Virgin says RPI plus 3.9%.  Okay, but that percentage on what amount?  For those of us given discounts to stay a customer, will that increase be applied to what we actually pay; or to the amount we would have been charged before discounts?  For instance, a price increase of 10% on a pre-discounted tariff (say, £15 on a £150 monthly charge) would be twice as much than if applied to a price paid after discounts (e.g. £7.50 on a £75 monthly payment).

Virgin needs to be upfront on what these terms will be before expecting customers to sign up to new contracts.

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cammyloon
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Re: Price Increases 2024 - How will they be applied?

Okay, debating with myself here.  I've seen some comments indicating that the price increase will be applied to the higher (non-discounted) price.

But I've also noticed Virgin provided a link to new Terms & Conditions in the email they sent me yesterday with my new rate.  It says:

"The amount the monthly price will increase will be RPI rate of inflation plus an additional 3.9% which is applied at the same time. This increase will apply to the monthly subscription price you’re paying at that time and also (if applicable) to the monthly price payable after subsequent expiry of any applicable offer or discount." https://www.virginmedia.com/help/pricechange2024?utm_source=itg&utm_medium=email&utm_campaign=cable_...

That seems to indicate the increase should be applied to the tariff AFTER discounts are taken into account - i.e. the price actually paid.

Am I missing something?

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Andrew-G
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Re: Price Increases 2024 - How will they be applied?

How do they work these out?  Here's a worked example: VM currently quote the introductory offer for the Big Bundle at £29.99 a month, and the undiscounted price is £65 a month.  From VM's point of view that's not 53.8% discount, that's a fixed £35.01 discount.  If the standard rate changes due to VM price increase, your underlying price gets increased, but VM keep taking off that £35.01 discount.  So a 13.8% increase - assuming that's the rate VM apply to this bundle - on £65 will be an extra £8.97, when that's applied to the £29.99 bill, what that customer pays is going up by 29.9%.  Since VM like to keep standard pricing in round numbers, the actual increase varies a bit on each bundle, but the effect is much the same as outlined here, maybe you are on the Big Bundle.  Now see what happens next year - if we guess RPI is 6.1% between now and early next year, then that's a 10% rise to the basic price.  For anybody still "in contract" for the Big Bundle deal by that time, then the maths are as follows:

This year: Discounted rate £29.99.  New price is (£65.00 x 1.138) - £35.01 = new discounted price £38.96, new standard price £73.97, effective price rise 29.9% for customers on the discount deal. 

Next year: Discounted rate now £38.96.  New price is (£73.97 x 1.10) - £35.01 = new discounted price £46.36 (new standard price £81.37), effective price rise 19.0% for those on the discount deal.  But because the RPI+4% formula is being added to the T&Cs, next year you won't be able to cancel or renegotiate when your price is massively hiked, instead you'll have to stomach that increase for the remaining duration of your fixed term.

If negotiating with Retentions, here's my suggestions.  None of this worries me though, I'm now with a smaller customer-focused ISP on a fixed price deal for the remainder of this year, and they do 12 months contracts without userous price hike clauses baked in.

cammyloon
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Re: Price Increases 2024 - How will they be applied?

Thanks Andrew for the helpful answer.  What you describe is what I suspected.

Based on my reading of the new Ts & Cs, it may be that Virgin will be changing its basis for calculation.  That will be a necessary positive if they do - and Virgin risks all kinds of turmoil next year if they don't.

But I feel I need reassurance from Virgin that they will from next year apply its increases to the price actually paid by its customers; not some notional pre-discount price as now.

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Andrew-G
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Re: Price Increases 2024 - How will they be applied?


@cammyloon wrote:

Thanks Andrew for the helpful answer.  What you describe is what I suspected.

Based on my reading of the new Ts & Cs, it may be that Virgin will be changing its basis for calculation.  That will be a necessary positive if they do - and Virgin risks all kinds of turmoil next year if they don't.

But I feel I need reassurance from Virgin that they will from next year apply its increases to the price actually paid by its customers; not some notional pre-discount price as now.


I stand to be proven wrong, but I believe the intention is to apply future increases in exactly the same way.  What is changing in the T&Cs is when the increase is made, and by how much, not by how it is applied to discounted contracts.  At the moment, VM can increase prices by any amount at any time according to the "old" T&Cs, but they have to give you the opportunity to leave a fixed term contract without penalty if they do that.  The changes planned are to make an annual price rise a part of those T&Cs according to a formula, and doing it that way means that after this year's price rise round there's no right to cancel or renegotiate because you've agreed to the T&Cs by taking on a contract with those revised terms. 

The logic on VM's part is that heavily discounted deals don't make much if any profit, and they try and "rebalance" things in their favour by price rises that exceed inflation.  This has been going on for years, and all worked fairly well.  However, Ofcom's ineptitude has created the situation where companies can bake in price rises on long fixed term contracts without giving customers the chance to cancel or renegotiate.  Ofcom are boldly investigating whether the companies are following the relevant rules, unfortunately that'll be a typical Ofcom whitewash - the big problem is not occasional non-compliance with the rules, it is those rules themselves, and the rules were created by the clowns of Ofcom.   

This gives a bit more on current and likely T&Cs.  If VM are willing to state that as from next year the RPI+4% price rise will be applied directly to the actual paid price then I'll eat humble pie.  That's still a poor result for customers, but it would be nothing like as poor as what I believe will happen.

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