Blog Post
Just received letter regarding the upcoming price increases which is £12 for my package of broadband, landline phone and tv. It’s an increase of approx 23%.
Before I decide whether to haggle for a new price or leave virgin altogether, is this about the norm for price increases as I read somewhere that the increase should be about 13%? Want to get my facts straight before I proceed.
The price rise is (in VM's universe) around 13.4%. But the way VM calculate the price rise is mendacious in the extreme, as a result those calculations the % increase for customers increases the bigger the discount the customer gets - some people are seeing 29.9% rises. This year you can negotiate or leave, if still a customer next year you won't have that luxury because VM are changing their T&Cs such that next April you'll be hit by an RPI+4% increase (perhaps 10%) that you won't be able to renegotiate.
The reason that the increase is greater for customers on discounted deals is because VM apply the price increase to the undiscounted bill, then add the result of that to your discounted bill. So using the example of the current introductory offer for the Big Bundle at £29.99 a month, which has an 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, your underlying price gets increased, and then VM keep taking off your £35.01 - you're still getting that discount. However, a 13.8% increase - assuming that's the rate VM apply to this bundle - on £65 will be an extra £8.97, when that is added 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. Now let's add this year and next year's increases together and see what happens:
March 2023: Discounted rate £29.99. April 2023 price is (£65.00 x 1.138) - £35.01 = new discounted price £38.96, new standard price £73.97, effective price rise 29.9%
March 2024: Discounted rate now £38.96. April 2024 price is (£73.97 x 1.10 (guessed RPI+4%) - £35.01 = new discounted price £46.36 (new standard price £81.37), effective in year price rise 19.0%
And for a customer who takes this year's price rise lying down, that means in April 2024 they'll be charged 54% more than the price their fixed term contract started on. 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 I've cancelled VM, they can go and rob the complacent.