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wifi4milez
Big Russ, 1918 to 2008. Rest in Peace

join:2004-08-07
New York, NY

This whole "True Cost" notion is a load of BS

The problem I have with the "True Cost" notion is that it only takes into account one aspect of the pricing of a service. Sure, the bandwidth to deliver an SMS costs a lot less than $0.20, however there is a lot more that goes into delivering that message that isnt reflected here. Think about it like this, what REALLY goes into providing an SMS?

1) Real estate costs to house support reps (a few hundred thousand dollars a month, if not more)

2) Salaries of support reps, technicians, and engineers (another few hundred grand per month)

4) Network costs such as equipment and depreciation, cabling, and even overtime (lets not forget about the union gouging the hell out of them either!). This is probably another few hundred thousand per month.

This is just the start, and there are likely many other expenses that I couldnt think of. Does it really cost the carriers anywhere near $0.20 to handle your SMS? OF COURSE NOT! HOWEVER, we must not forget that they (carriers) are running a business, and if people are willing to pay for something then market price will determine how much a company can charge.

People like to analyze and dissect the pricing of almost all the goods/services we purchase. Sure, it might be fun to be an "armchair general" and (incorrectly) assume you can calculate costs, however it wont do anyone a bit of good. If people think the cost of a service they choose to buy is too much, then they can simply stop using it. Clearly, the market has determined that customers will pay $0.20 per SMS, and so therefor the "True Cost" of an SMS is (get ready for it...........)
$0.20!!
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Cod

join:2000-07-05
Kernersville, NC

Re: This whole "True Cost" notion is a load of BS

Well said. But you know that if all of what you just said was part of the article here @ BBR, it wouldn't be such sensational "news" now, would it?

factchecker

@cox.net
said by wifi4milez:

Clearly, the market has determined that customers will pay $0.20 per SMS, and so therefor the "True Cost" of an SMS is (get ready for it...........)
$0.20!!
No, true cost (or actual cost) is different than market price... Let's try not to confuse the terms here...

The true cost of send one SMS message is probably, at most one to two cents (when you divide the costs of offering the service over the millions of messages sent per month)... The _market price_ is twenty cents.

wifi4milez
Big Russ, 1918 to 2008. Rest in Peace

join:2004-08-07
New York, NY

Re: This whole "True Cost" notion is a load of BS

said by factchecker :

said by wifi4milez:

Clearly, the market has determined that customers will pay $0.20 per SMS, and so therefor the "True Cost" of an SMS is (get ready for it...........)
$0.20!!
No, true cost (or actual cost) is different than market price... Let's try not to confuse the terms here...

The true cost of send one SMS message is probably, at most one to two cents (when you divide the costs of offering the service over the millions of messages sent per month)... The _market price_ is twenty cents.
Wrong. "True Cost" is a term that was made up, and means whatever that person wants it to. My example was that the true cost of a service is what people are willing to pay for it. In this case, true cost = market price.
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factchecker

@cox.net

Re: This whole "True Cost" notion is a load of BS

said by wifi4milez:

Wrong. "True Cost" is a term that was made up, and means whatever that person wants it to.
One could argue that you are wrong because you are the only one using the term "true cost" while referring to "market price" and not "actual cost".

As for it meaning whatever you want it to, a quick Google search doesn't support that assertion either because it is used in place of the term "actual cost'...

For example, "The True Cost of Only Paying Minimum Payments", etc.

wifi4milez
Big Russ, 1918 to 2008. Rest in Peace

join:2004-08-07
New York, NY

Re: This whole "True Cost" notion is a load of BS

said by factchecker :

said by wifi4milez:

Wrong. "True Cost" is a term that was made up, and means whatever that person wants it to.
One could argue that you are wrong because you are the only one using the term "true cost" while referring to "market price" and not "actual cost".

As for it meaning whatever you want it to, a quick Google search doesn't support that assertion either because it is used in place of the term "actual cost'...

For example, "The True Cost of Only Paying Minimum Payments", etc.
Again, even in those instances it an arbitrary figure that someone came up with. In this case, I am simply pointing out that the true cost of an SMS is market price; otherwise people wouldnt use the service.
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Expand your moderator at work
Skippy25

join:2000-09-13
Hazelwood, MO

Re: This whole "True Cost" notion is a load of BS

I agree with factcheckers sight on this. You are saying true cost to consumer is market price, he is stating what the true cost is to the company to provide what the consumer is consuming.

Market price is simply what people are willing to pay for it regardless of the cost to produce it is. The PS3 is a good example of a market price not being able to adequately meet the true cost to provide the product.

Also your talk of support people and such is utter nonsense. Any fixed cost is a fixed cost period and any resources needed to be dedicated to SMS (which is HIGHLY improbable) would be divided by the total SMS sent/received which would bring even 10 people making $100/hr down to fractions of a penny.

wifi4milez
Big Russ, 1918 to 2008. Rest in Peace

join:2004-08-07
New York, NY

Re: This whole "True Cost" notion is a load of BS

said by Skippy25:

I agree with factcheckers sight on this. You are saying true cost to consumer is market price, he is stating what the true cost is to the company to provide what the consumer is consuming.
I disagree. The true cost to the consumer is what their bills reflect; thus, the true cost = actual cost. Following this logic, true cost to a consumer = market price.

said by Skippy25:

Market price is simply what people are willing to pay for it regardless of the cost to produce it is. The PS3 is a good example of a market price not being able to adequately meet the true cost to provide the product.
I need to disagree here too. One could argue (using the same logic as before) that in this case true cost and market price are also the same. A consumer (usually) has no insight into how much it actually costs to produce something, nor does that have any bearing on the cost passed on to the end user. One could analyze the cost of all the components of something, however the true cost (or actual cost) will also factor in all the other things I mentioned in my original reply. Once everything is factored in (with a healthy margin of on top), an actual cost is given to the customer. Regardless of how much information (or how much insight) the customer has into how much each piece of the final product cost, the ultimate price the consumer pays is market value. You will notice I substituted "true cost" for a number of different terms, yet they all equate to market price in the end.

said by Skippy25:

Also your talk of support people and such is utter nonsense. Any fixed cost is a fixed cost period and any resources needed to be dedicated to SMS (which is HIGHLY improbable) would be divided by the total SMS sent/received which would bring even 10 people making $100/hr down to fractions of a penny.
While the real estate costs are fixed, many of the other things I mentioned were not. Certainly not the union, nor overtime expenses. Even the full time support employees are in a grey area as to if they are fixed or variable costs. I can also guarantee you that all the major carriers have an entire team dedicated just to SMS support.

At the end of the day, we can try to peak under the sheets and come up with some arbitrary number of what we think it costs a carrier to provide us with a service; and then what? These are optional services, if you dont like them then dont use them. None of us truly have access to a carriers complete financial records anyway, certainly not on the detail to truly understand the cost to provide a specific service. At the end of the day, (as I have said before) the "true cost" to a consumer = "what you are willing to pay".
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Skippy25

join:2000-09-13
Hazelwood, MO

Re: This whole "True Cost" notion is a load of BS

You completely missed my first point. However, I now remember why I avoid posting with you. You are simply one of those guys that refuses to look outside of his little box and try to comprehend what others are saying.

wifi4milez
Big Russ, 1918 to 2008. Rest in Peace

join:2004-08-07
New York, NY

Re: This whole "True Cost" notion is a load of BS

said by Skippy25:

You completely missed my first point. However, I now remember why I avoid posting with you. You are simply one of those guys that refuses to look outside of his little box and try to comprehend what others are saying.
You completely missed my point aparently. I understand what you are saying, and I happen to disagree with you. We can sit here and debate the value of a product for weeks, however when it comes down to it the value of a product is what someone is willing to pay for it. Nothing less, nothing more. Simple economics will always dictate that.
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