Pricing Mobile Services for Success: towards a bundled future

Published by Analysys Mason (June 2006)

 

Dr Mark Heath, Director of Research at Sound Partners Dr Mark Heath
Director of Research, Sound Partners

Dr Alastair Brydon
CEO of Sound Partners

 

  “Pricing has a critical role to play in growing voice revenue and stimulating take-up and usage of new data services. However, wrong pricing decisions now could create barriers to growth and may have long-term consequences. Bundled pricing, when properly implemented, is a powerful technique to drive revenue growth in the short and long term.”  
 

Product overview

Pricing decisions have never been more important for mobile operators. Pricing has an immediate role to play in maintaining and growing mobile voice usage and ARPU, and kick-starting much-needed new revenue from mobile data services. It can also have a major impact on the relationship between operators and their customers, and the long term effects of this on churn and price competition. However, mobile service pricing is a complex subject, complicated by the sheer diversity of services, and mobile operators face many pitfalls. Operators must attempt to extract the full revenue potential of each service while taking account of a wide variety of factors, including affordability for end-users, the unique capacity and cost limitations of cellular technology, and the ability to differentiate from competitors.

Pricing Mobile Data Services for Success defines seven golden rules for mobile pricing, as a framework for maximising overall ARPU and profitability. It shows that the emerging approach of bundled pricing adheres well to these rules and discusses how bundled pricing can be applied to deliver major benefits to mobile operators in both the short and long term. The report also evaluates flat-rate pricing, in effect an extreme form of bundled pricing, where unlimited usage of services is provided for a defined price.

 

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This report answers your key questions

Pricing Mobile Data Services for Success answers your key questions:

  • How can pricing maximise ARPU and service profitability? What are the golden rules that need to be followed, and how can operators avoid the pitfalls?

  • Is bundled pricing the optimum solution? How should it be implemented most effectively?

  • How can bundled pricing be used to drive voice usage and the take-up of new data services?

  • What are the strategic benefits of bundled pricing? How can it be used to strengthen customer relationships, to increase ARPU, reduce churn and minimise price competition over time?

  • Is flat-rate pricing a step too far, or does it have a valuable, albeit limited, role?

  • What actions need to be taken by mobile operators, and service management and billing system vendors to seize the opportunities in mobile services pricing?