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”.
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.
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!