I Paid Just Over $1800 for My New Car!!! Really!

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You read the title right and I meant it. I paid just over $1800 for my new car last November. At least that is the case if you price it out using the “Walt Mossberg Method of Valuation”.

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I was on the treadmill earlier thanks to the urging of the Striiv pedometer/workout device I have been using since CES 2012 and was watching the WallStreet Journal’s tech update on Hulu. One segment began with the above placard. Then during the piece the following was on the screen.

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No Uncle Walt and the WSJ weren’t doing anything that isn’t standard practice across the cellphone industry and in the media. Just go on any carrier’s website and your see “This phone is $199”, “This phone is $99” etc. Of course these prices, as well as the $50 price on the Nokia 710, is the price ON CONTRACT but that is not what the lead-in or the tagline on the piece said. It said $50 and that is just plain deceptive. By the same logic I paid just over $1800 for my new car.

The fact, however, is this: The Nokia phone is $50 to get into and then $45 a month or more for the next two years because you have to COMMIT to a data plan to get it. Similarly, my car was $1800 to drive off the lot but the lease payment will be over $5000 a year for the next three years. Translation- the Nokia 710 is actually over $1500 and my car will cost me over $15,000 for the lease. But $50 sure sounds better doesn’t it? And THAT is why companies advertise that way.

It is this kind of approach that gets people to buy the iPhone 3GS for $0 when for $100 more they can get the iPhone 4 and for $100 above THAT they can get the iPhone 4S. The data plan is the same for each, hence the overall cost between the 8GB iPhone 3GS and the 16GB iPhone 4S over the two years of the contract differs by only $8 a month. $8 a month and the difference in the devices is tremendous.

But there I was on the treadmill with trusted Uncle Walt Mossberg tempting me with a bargain- the first Nokia phone to run Windows Phone for just $50!!! That is one excellent loss-leader.

Oh, and by the way, Elana’s and my first house? We got it for just over $30,000!

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About the Author

Dan Cohen
Having a father who was heavily involved in early laser and fiber-optical research, Dan grew up surrounded by technology and gadgets. Dan’s father brought home one of the very first video games when he was young and Dan remembers seeing a “pre-release” touchtone phone. (When he asked his father what the “#” and “*” buttons were his dad said, “Some day, far in the future, we’ll have some use for them.”) Technology seemed to be in Dan’s blood but at some point he took a different path and ended up in the clergy. His passion for technology and gadgets never left him. Dan is married to Raina Goldberg who is also an avid user of Apple products. They live in New Jersey with their golden doodle Nava.

9 Comments on "I Paid Just Over $1800 for My New Car!!! Really!"

  1. This is a faulty analogy. Regardless of the smartphone you choose (special BlackBerry add-ons and T-Mobile’s discount when you bring your own phone notwithstanding), you will be paying the exact same price for your voice plan, data plan, messaging plan, etc. Even if you bring your own smartphone to AT&T, Sprint, or Verizon and sign up for a new contract you would be paying the same monthly rate that you would be if you had taken the “discounted” phone instead. So as much as I usually disagree with Walt, it’s well within reason to say that the phone is $50.

    • But for the person moving from a dumb phone to a smartphone this phone ISN’T really $50 is it? I’ll accept that the analogy is flawed based on your reason but it is not as flawed as calling it a $50 phone. It isn’t.

      • Even if you had a dumbphone, if you wanted the exact same data services as a smartphone (different APN -> different data priority… and protocol allowances too; I remember not being able to SSH on a dumbphone plan, though I can’t seem to recall which carrier it was) there’d be no difference in the monthly service costs.

        • So are you saying that calling that 710 a $50 phone is accurate? That’s all I want to know.

          • It certainly would be MORE accurate to say “$50 after rebate”, but to the extent that most people are familiar with the fact that you need to get a contract when you’re dealing with postpaid service — yes.

    • The reason I think the analogy works is this: most of the ‘free’ or ‘$50’ or whatever talk is aimed at bringing new customers to smartphones.  Whether they are kids or just folks who are still on messaging phones (I’m the only smartphone user in my family) – the push over the last year has been switching users to smartphones – just look at your Verizon store!

      We ran the numbers when my wife was thinking about it – and she used my Droid for a couple of months, which added ~$35 to our bill ($29.99 + all those other ‘fees’).  Wasn’t worth it for her … and as we tell my younger son who wants an iPhone something bad – it isn’t the $200 for the iPhone, it is the $840 over the next two years in data fees.

      And I’m sorry, but you jumped off the reality train when you started talking about SSH on a dumb phone and ‘same services’ on dumb phones – you can do a $9.99 plan for email and limited web (in my case several years ago it was a VZW portal) … we are talking about actual consumers here.

      • The average consumer may not fully use the features of their data plan, but the average consumer doesn’t fully use the features of their smartphone (or dumbphone, for that matter) either. It’s not my fault that it didn’t occur to me that the carrier would block port 22 and prevent me from SSHing to my home computer on a $10 plan 😉 Data is data, right? It’s not like someone would be able to download large attachments on a GPRS connection… (Good thing the SE K800i supported CSD, though 9600 baud via a free dialup ISP isn’t fun at all, especially when it counts against your minutes…)

        Let me try a different analogy here. Let’s say you own a cheap B&W laser printer that you use when you’re working in your home office. It does the job, and you can easily refill the toner; costs you about $10/mo in toner. Now, on Sunday you get a Best Buy ad that’s advertising color ink-jet printers, and you think to yourself that you’d really like to be able to print in color.

        There’s a very large range of ink-jet printers in the ad. You can get anything from a pretty basic one that does pretty good photos for $50, to a crazy 7-in-1 multifunction 2400 dpi machine that auto-duplexes, collates, and whatever else you can think of for $500. The catch is that you can’t refill the ink cartridges yourself because they’re all chipped, and no 3rd parties have been able to figure out how to get around it yet. You work out that the monthly expense of ink will run about $30/mo.

        How much does the basic color printer in the ad cost? Is Best Buy falsely advertising their printer by saying it costs $50? And before you say it’s different because a contract is involved with the phones: that’s not relevant to the analogy, because even if you were to bring your own phone for postpaid service you’d still end up with a contract.

        NOW… is a $50 Nokia 710 a good deal, once you factor in the TCO? Probably not — but that’s a different question from whether or not advertising it for $50 is misleading. I think the much bigger issue here is the large crowd that doesn’t do the math!

        • “I think the much bigger issue here is the large crowd that doesn’t do the math!”

          And THAT is what the carriers depend on … people not doing the math upfront, and not reading the details of their monthly bills … 

          • Exactly. And Walt Mossberg should know that and make that clear. The “savings” on a $50 phone versus a $199 phone are tiny when you consider the monthly costs are the same.

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