Vodafone Netherlands has cut the prices on nearly all of its monthly plans. While the operator’s Start S is unchanged at €7.50 (US $8.02) per month, its Start M and Start L now cost €10 (US $10.20) and €12 (US$12.83) per month, respectively. Red Start M (€15, US $16) and Red Start L (€18, US $19.25) offer more data, and Red Essential, now €18, includes unlimited calls. The standard Red plan still costs €40 (US $42.78) per month, but the promotional rate was cut to €22.50 (US $24) from €30 (US $32.10). Red Super is offered for €27 (US $28.88). The change is the biggest for Black, which offers the biggest bundle, 25 GB data per month. It normally costs €90 (US $96.27), but is now offered for €66 (US $70.60) per month. Vodafone is also waiving its activation fees under its current promotions. All the prices apply for a 24-month contract.
Vodafone NL’s price slashing may seem dramatic, but we think it is a savvy move to drive customers to longer-term commitments which will create more secure revenue for the operator. The advantages of doing so should outweigh the advantages of higher rates. Of course, not all plans are cut, and in one case only the promotional price is reduced. In addition, there is motivation for the operator in the realm of data consumption; the biggest price reduction comes in the plan with the largest data, so the operator clearly hopes that a large enough number of users will be incentivized to sign up for the Black plan and therefore end up using massive amounts of data long term. In short, we feel that even non-promotional, nearly across-the-board price cuts can have the effects of attracting a sufficient number of customers to long-term contracts, migrating customers from prepaid to postpaid, and encouraging data use—to the point of making it very worthwhile.