Thursday, June 1, 2023

Bundle Pricing Complicates Cost Estimates

It never is easy to figure out what customers actually are paying for their connectivity services. 


“Among the 18,359 consumer bills on which an internet price could be identified, the median cost of high-speed internet service was $74.99 per month,” says Consumer Reports. About half of the households were paying between $60 and $90 per month.


About all we can say, based on that study, is that U.S. households who buy a discrete home broadband service, rather than a bundled service, pay about that much. But most households do not buy their home broadband service that way. 


It is possible that 40 percent to 60 percent of U.S. households, for example, buy bundled services where home broadband is a component, and pay a discounted price, compared to the stand-alone retail price.


Study

Percentage of Homes Buying Service Bundles

Leichtman Research Group (2020)

58%

Strategy Analytics (2021)

63%

eMarketer (2022)

65%

Parks Associates (2023)

67%


A 2022 Pew Research survey found that about 40 percent of U.S. customers purchased a services bundle. 


The latest survey by Leichtman Research suggests 46 percent of households buy a bundled service. 


And since the point of buying a bundle is price discounts, about all we can say is that most U.S. households likely spend less than reported by Consumer Reports. 


Complicating matters further, customers are buying service plans offering higher speeds than they used to, and typically paying more for those plans, even if we adjust prices for inflation effects.


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