The Biggest Rip-offs and Best Bargains in Consumer Tech

Mark Lowenstein / May 16th, 2016

I’ve been thinking about pricing for various consumer tech products and services and there are some aspects that are incongruous. For example, how is it you can host a conference call for 150 colleagues for free using FreeConference, yet the minute you leave the U.S. with your cell phone, pricing leaps to the stratosphere? So, here’s my admittedly subjective list of the biggest rip-offs and best bargains in consumer technology.

Rip-offs

1. International Cellular Roaming. This is the last bastion of 1970s era telecom pricing. Voice calls can average $1.00 per minute or more and data pricing can be 10x what it costs in the U.S. T-Mobile offers more favorable international roaming rates, especially within North America but exorbitant international roaming rates are one of the most common consumer frustrations in tech.

2. Apple Storage. There’s storage. Then there’s Apple device storage. Apple charges $100 more for an iPhone 6s with 64GB of storage compared to the 16GB model. By contrast, a 32GB microSD card for Android costs $15 or so. To really put things in perspective, $60 buys a 1TB external hard drive for a PC.

3. Cable Box Rental. If you are a cable TV subscriber, you’re likely paying some $200 or more per year for the privilege of renting a set-top box. And there’s no choice in the matter. This is a bonanza for the cable companies, sort of like the $4 billion in baggage fees collected by the airlines every year. The FCC is onto this, with its recent proposals to unlock the set-top box and promote competition.

4. Most extended warranties. Much ink has been spilled (what’s the digital equivalent of that term?) advising consumers not to buy the extended warranty on most consumer electronics products. But the extended warranty is still a part of the pitch, especially when purchasing at a retail location. Usually it’s not worth the price, although Apple Care and some of the cellular ‘insurance’ programs are worth it if you’re a serial phone dropper or need a lot of tech support.

5. Printer Ink. This is the consumer tech’s best ‘razors and blades’ product. HP might well be out of business were it not for high margin ink sales over the years. There are some workarounds and the occasional bargain if you look hard enough, but nobody who buys printer ink is happy about the price.

6. Cable Unbundling. A significant percentage of cable subscribers are paying for a bundle of broadband, pay TV, and phone services. Most consumers believe they’re paying too much for that bundle. But try taking that bundle apart and the picture gets even worse. Ask for a broadband only plan from your provider and that cable part of your bill starts looking more attractive.

7. Wi-Fi Access Points. For the important role that Wi-Fi plays in our daily lives, dropping $100 for a decent Wi-Fi AP seems like a reasonable expenditure. My beef, however, is it’s very difficult for the average consumer to determine the right mix of quality and value in this product category. Many Wi-Fi APs have similar specs (generally undecipherable to the average consumer) but prices are all over the map. There are some clearly superior APs, but they come at a significant price premium.

8. Fees on Most Telecom and Cable Bills. Telcos and cable providers are great at turning that $99 plan into $140, once taxes and fees are included. My latest cable bill has 10 separate “taxes, surcharges, and fees” on it. Call to complain and they largely blame it on the government and the FCC. But I am sure there are certain fees that are not all going into that specific regulatory coffer. An example of fee creep: RCN, which offers a competitive cable and broadband service in some markets, has separate ‘surcharges’ for broadcast TV, sports, and entertainment. Sort of like a ‘movie surcharge’ if you go to a movie. Hmm…

9. International Voice Calling. It is still easy to fall into the trap of paying some exorbitant price for the occasional international call. You see it on the phone bill and say Whoaaa! For those who make a lot of international calls or who hunt around, there are tons of inexpensive options – Skype, FaceTime, some specific international calling plans offered by the telcos – but for the casual caller there’s bound to be the occasional gotcha.

Bargains

1. Music Streaming Services. Compared to the physical or digital download world, paying $10-15 per month for access to a vast library of music content is one of the best values available in the digital world. In reality, these services should cost a lot more because I’d like to see more money go to the artists.

2. Netflix and HBO. I separate these folks out because they are spending billions on creating fantastic original content. Paying $10-20 per month for access to their entire library, on demand, on any device, is great value for money.

3. Amazon Prime. Even though the price went from $79 to $99, the vast majority of Prime subscribers believe they are getting a great bargain, even if they just use it for the free shipping benefit. There are, of course, several other features of Amazon Prime that make it an even better value. This will be one for the business case history books.

4. A mid-priced Android phone. Many people believe that, even though smartphones are good products, they’re expensive. That’s certainly true of the high-end, flagship phones, such as the latest iPhone or Samsung Galaxy device. But there’s an increasingly impressive array of very good Android phones in the $300-400 range that offer nearly the same capabilities as top of the line products. This is not a huge outlay considering the range of things one can do from a smartphone today.

5. Free Conference Calls. This is one I have never been able to figure out. How do services such as Freeconference.com, which allow you to host a call for up to 100 people, for free, make money? Yes, I know – it’s a freemium model. But you have to admit to wondering, “how can this be free?”

6. Web site domain names. It’s $10 a year or so to own a domain name. That’s one of the best bargains in digital real estate. It’s a bit incongruous given the many smarty pants who bought a domain like clothing.com on the cheap and sold it for a gazillion dollars. But the domain name party has been the digital version of the 1860s Homestead Act.

7. Voice calling. Voice calling has become practically free. It’s included in most cell phone plans and cable/telco ‘triple play’ type services. Even if you’re still dependent on a ‘landline plan’, there are inexpensive VoIP plans, provided you have a decent broadband connection. So, with a few exceptions, if you’re paying more than $10 a month for domestic voice calls, you’re paying too much.

8. Tax Software. Yes, there’s a bit of baiting and switching here with the more popular services such as TurboTax. It’s free! No, wait, if it’s more than 1040 EZ, then it costs. Then there’s the State return, and so on. But even at $50-100, which is what most people spend, it’s a pretty good bargain. And these folks seem to do a pretty good job of keeping up with our increasingly complex tax code.

9. Google Maps. I have kept free, ad-supported services such as Gmail and Facebook off the ‘bargains’ list, but then I started thinking about what app or service would I be glad to pay $100 a year for and came up with Google Maps. First, it’s a valuable product, used frequently, that continues to improve and second, the advertising component of this is a lot less obvious or intrusive than many other apps or services.

I’d welcome your thoughts and ideas on this list!

Mark Lowenstein

Mark Lowenstein is Managing Director of Mobile Ecosystem, an advisory services firm focused on mobile and digital media. He founded and led the Yankee Group's global wireless practices and was also VP, Market Strategy at Verizon Wireless. You can follow him on Twitter at @marklowenstein and sign up for his free Lens on Wireless newsletter here.
  • steve849

    I agree with Google Maps. I have thought I’d pay $100 too, especially with the semi-intelligent rerouting it gives me during navigation when traffic changes. I try TomTom and other apps; they try, but are not quite there.

    I hate paying $30+ for a printer cartridge and have had bad luck with the knockoffs. Of course, the printers are cheap which somewhat compensates. Looking at it as the total cost of printing, maybe it’s not so bad.

    • Glaurung-Quena

      “Of course, the printers are cheap which somewhat compensates. Looking at it as the total cost of printing, maybe it’s not so bad.”

      You’re fooling yourself. Don’t be a sucker. Unless you need to print photos, buy a color laser printer. And considering the number of photo printing kiosks that I see in drugstores, supermarkets, and copy shops, you don’t actually need to a printer to print photos anymore unless you live in the boonies or you print tons of photos.

      • obarthelemy

        Agreed. I’ve even gone back to monochrome laser, photos live on screens these days. I’ve had 3 inkjets dying from disuse, got the message.

      • palmvos

        well, you could try the experiment that Epson is doing- they have a set of expensive inkjets that have 3 years worth of ink in the box with the printer.
        or, look at the low end of business grade inkjets. these are made to have a per page cost comparable to color laser. yes these are more expensive, and research and digging need to be done to keep things comparable.

        • Glaurung-Quena

          That only works if you print consistently. Nowadays, for many people, they only need to print every so often, which means the ink dries up, clogs the print head, and next thing you know you need new cartridges or a new printer. Wasteful. Laser is by far the superior solution if you are not printing very often.

  • Glaurung-Quena

    “To really put things in perspective, $60 buys a 1TB external hard drive for a PC.”

    Oh Puh-lease. You might as well have said, “Ferraris are ludicrously overpriced at $100k; to really put things in perspective, a horse and cart costs only $5k.”

    The correct comparison would be that $60 will just about buy you an inexpensive 240gb SSD.

    • Agree that this one is a bit disappointing. It’s much more interesting to try to understand why companies can charge more, and when applicable, to understand what value consumers are getting out of the premium/rip-off pricing.

      • klahanas

        I agree. There may even be cases where you see the costs of lock-in…

        • Lock-in is only one of the ways to charge a premium price. The textbook example are printers and ink, razors and blades.

          Most of the rip-off examples in the article aren’t lock-in though. I would certainly not count Apple’s storage prices as lock-in. Here we have an assortment of branding, monopolistic markets, disruption, lock-in, real costs and more. I find it very naive to lump them all together as “rip-offs” (a word with strong negative connotations), and as evidenced by where the comment section is going, it’s not a good way to encourage constructive discussion.

          • Space Gorilla

            Naive, that’s a good way to describe it. And you’re right about the comments. I knew as soon as I saw the headline we’d have the same old “Apple baaaaaad” prattle.

          • klahanas

            You’ve finally led me to see the light ” International Cellular Roaming” is fully justified, go AT&T!

          • klahanas

            And it’s those ways to which I’m referring.Lock-in is only one of the ways to charge a premium price”
            And it’s those ways to which I’m referring.

      • obarthelemy

        Good’ol bait-and-switch ? Get a first low-storage iPhone, get locked-in, realize storage is too low, get bled for more storage the second time ?

        That’s playing out a lot around me. People really struggling with their 8/16GB iPhones, yet not really willing to put the effort to switch to Android, plus uncomfortable at losing iMessage, iTunes content, whatever peripherals they bought.

        • There are a lot more examples of “rip-off” other than Apple. Lock-in is but one way to do it.

          Of course, the measure of a strong brand is the ability to charge significantly more for the same thing. You can call it a rip-off, but I call it branding. And Apple has always done this, even with exchangeable Mac RAM, so it’s not so much of a lock-in thing.

    • klahanas

      There’s no Ferrari versus horse comparison here. Though it could have been better delineated, Apple memory is consistently much more expensive, in each type and class, over what can be purchased individually. Apple Ferrari’s are more expensive than Crucial Ferraris, Apple horses are more expensive than Intel horses…

      • Glaurung-Quena

        “There’s no Ferrari versus horse comparison here.”

        I guess it was too much to hope that everyone would have the necessary degree of reading comprehension to understand my point. Try this one on for size: “Best buy charges way too much for its gold plated HDMI cables. To really put things in perspective, you can get an S-Video cable for only $1”

        • klahanas

          No, but my point was about gold plated hdmi cables from best buy versus Apple.

          • Glaurung-Quena

            You’re very obtuse.

            The article complained “[expensive tech company] charges too much. You can get [almost equivalent tech] for much less. To really put things in perspective, you can buy [completely incomparable last century tech] for less.”

            I was mocking the stupidity of bringing up hard drives in a comparison of flash storage prices. I was not saying anything whatsoever about whether or not apple overcharges for their flash storage. Thank you ever so much for leaching all the fun out of my satire this morning.

          • klahanas

            Didn’t see the humor, so obtuse I am indeed. Does not change the fact or even the point of inclusion by the author.

    • obarthelemy

      Actually, memory encompasses RAM, onboard Flash, SD Flash, SSD, Hard disk…

      “Memory” != “RAM”, that’s why they add “Random Access” in front of it.

  • Glaurung-Quena

    “renting a set-top box. And there’s no choice in the matter.”

    Actually you do have a choice.

    Here in Canada, you can buy a set top box at any Radio Shack (or whatever they’re calling themselves these days, the stores still exist) or Best Buy. I gather in the US the cable companies do a better job of hiding the fact that you can buy them, but you can buy them.

  • obarthelemy

    That list is very US-centric, to the point of feeling parochial. In France:

    1- My $20/mo (regular price is $25, I get -$5 for using the my carrier also as my ISP) unlimited contract works as-is in all of European Union 29, USA, Canada & Israël for 1month/year, ie if I spend my holidays in those countries (and luckily, I do), it’s not even considered roaming, not even for data.

    2- Who buys Apple any more ?

    3- ISPs must publish a list of 3rd-party approved boxes if they bill for them separately. My $25/mo unlimited xDSL includes it, I could buy a substitute for the xDSL part, but I’d lose the landline and the TV functionality, so I don’t, especially since I’m entitled to a free upgrade to the latest box every 2 years.

    4- 5- Warranties & Ink. Agreed. Epson or Canon have an eco line with botlles of ink, not cartridges, though. Way cheaper.

    6- in France, bundles must list the prices of each item and the bundle discount separately, and allow consumers to buy only what they want and forgo the discount. That makes pricing a lot more transparent, and, for some reason, more sane.

    7- smallnetbuilder.com

    8- Again, in France, advertised prices must include all fess and taxes for Consumer products/services (and credit must list total cost and effective rate). Whichever number is the biggest on the ad is the one I’ll actually be paying. What a concept ^^

    9- That $20/mo contract includes unlimited calls to landlines in over 100 countries, and mobiles in a handful (the ones that also pay for their own incoming calls: USA, Canada, China).

    As a side note, I’m surprised you’re not even listing having to pay for… being called… (!!!) as a racket. I’ve got no control over who calls me, no way I’m paying for it.

  • obarthelemy

    Last but not least, Android’s midrange is $200-$300, not $300-$400. The current standard-bearer is the $200 Huawei/Honor 5X (http://www.gsmarena.com/huawei_honor_5x-7590.php : 5.5″, 1080p, Snapdragon 616, 2 GB RAM, 16GB Flash + µSD, OK everything: battery, camera, screen, sound, performance, build, looks).

    LG’s G4, Moto’s X Pure, HTC’s ONE (2015)… start at $300 unlocked on Amazon.com. Only Samsung adds a $50-$100 glamour tax on its Galaxy A midrange & last-year’s flagships.

  • HFM

    Regarding the Free Conference Call, in the US, they’re exploiting a regulatory hole:

    https://www.quora.com/Whats-the-business-model-for-the-free-conference-call-providers

  • HFM

    Oh, and just got down to your “Free tax software”, which set me off on a rant. I’ll spare you my version, but here’s the Los Angeles Time’s take on how “The tax-prep industry lobbies hard to keep Tax Day a torture for you”

    http://www.latimes.com/business/hiltzik/la-fi-mh-these-taxprep-companies-lobby-hard-to-keep-tax-day-a-torture-for-you-20150414-column.html

  • K447

    “… If you are a cable TV subscriber …”

    Well, there is your problem right there.

    My cable TV service has been ‘cut’ for several years now, not expecting that to change, ever.

    Everything is OTT for me now. I just need plenty of Internet capacity and speed, everything else will work out just fine.

  • K447

    “… with a few exceptions, if you’re paying more than $10 a month for _domestic voice_ calls, you’re paying too much…”

    Even ‘international’ voice calls via VOIP can be quite economical. The VOIP provider I am using is less than 1 US cent per minute outbound to US + Canada. I needed to call Iceland recently, my cost was less than 3 cents per minute.

  • Vadim Dumin

    Today I thought I lost my car. Looking for the history through GoogleMaps logs and SkyTrain logs did not pinpoint the location (although it helped to calm me down). Then a family member called me and … voila! the car was found 2 minutes walk from home. Good work wireless providers for keeping our data up-to-date!

  • Officer Dribble

    Every time I use Google Maps or Apple Maps (yes…I know), I find it astonishing that the software is given away free. Seriously…how on earth does that work?

  • jfutral

    Phil Baker, in his new article here, just reminded me of another rip off—Tesla’s “hardware” upgrade. Over $3000 to activate additional battery capacity via a software patch… that is already there in car. That’s hutzpah.

    Joe

    • klahanas

      Amen! Heading there now.

  • John Terrence

    Many noise cancelling headphones(with average performance) are a rip-off – charging a $50 premium for adding a $2 chip and mic. Maybe it’s even true for the all earphones field, since there’s no easy way to do comparison shop, taking in account quality, comfort and price , online.

    BTW, looking at some patent releases on from Apple regarding noise-cancelling headphones, and recent advances in machine learning(that both enable leading performance, and bypass patents from the market leader, bose) – maybe the next hit gadget are noise-cancelling headphones that can effectively make a room full of people much quieter and of cancel other high frequency noise( a weakness in most current tech, except Bose), at a reasonable price.

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