Wednesday, 28 September 2011

Putting up prices

Always a tricky business changing prices.

We have put up the broadband again, this time by 25p a unit, and re-jigged daytime and evening usage levels to be more favourable to business customers.

There is a clear objective in my mind for this - to balance daytime and evening better, and to allow us to spend more on capacity and some major upgrades.

Over the years we have seen evening/weekend usage gradually increase so that it is now a clear peak in usage. We just need to steer that back to more business customers.

There is also a view that if people use less or we have people leave us, we are putting off the inevitable 10Gb/s upgrades we need just a bit more. It is big and scary and expensive. It will be needed in the next 6 months, but we need to take this carefully.

I think we will have some people leave. We will have some people reduce how many units they buy. We will have some increase the number of units. I suspect we'll have lower take up of new lines - but not sure. People tend to buy because of quality and personal recommendation. It costs for us to provide quality. Perhaps we are reassuringly expensive now. I hope so.

That said, decreasing prices is tricky too. It does not always get the extra business you hope for. It is also easy to get it wrong and find you cannot afford to run the service properly. We have done a price decrease wrong in the past, and that hurts.

The main thing is we are taking the long term viability of the company seriously and we expect to still be here in another 14 years. That means making tough choices some times and making price changes.

I hope customers understand. I understand if some need to leave.

http://aa.net.uk/news-2011-10.html

19 comments:

  1. I welcome the daytime increase in allowance. I am currently on 20CN but my local exchange is due for upgrade to 21CN just as your changes come into effect so while my off peak allowance will remain the same, my daytime allowance will increase by 150%.
    Your service is second to none and I know that the price increase would not have been introduced if it wasn't necessary. Keep up the good work, I for one won't be going anywhere.

    ReplyDelete
  2. At least you have the guts required to not try and argue that this isn't a price rise, it's a readjustment, so people can't escape their minimum term with you.

    Many companies would try and say that because peak allowances have increased, this isn't a price rise, so you can't migrate your 3 month old FTTC install away to another provider.

    As a side note, it would be really nice to know that you've identified customers who would have needed more units under the new charges in the last (say) 6 months, and contacted them separately so that they know that it's not just 30p/unit more. That really would put you into "scrupulously moral and honest" territory - and indicate that your "business ethics" are strong :)

    ReplyDelete
  3. For what it's worth, I understand completely and I'd rather you charged enough to keep doing the great job you do, than to cut back in terms of service.

    Also, for my own usage these changes actually help a lot - I look to consume about the same data during daytime and evening slots, so the increase in daytime bandwidth at the price of the barely-scratched huge evening limits is all good stuff.

    Of course, this does mean I'm less likely to need to buy extra units for a while :)

    ReplyDelete
  4. Farnz, good point. We already do the carry over to allow for people to react to the usage level changes. Obviously if someone is caught out and ends up paying top-up we can adjust that retrospectively. Not trying to catch people unawares here.

    ReplyDelete
  5. Like the honesty, another reason for staying with A&A. Good service costs money, unfortunately the general masses want something for nothing.

    Personally, I've just checked against my existing usage for the YTD and on average, my unit-usage will be 9% lower.

    ReplyDelete
  6. Ok well I'm on be and _all_ my usage now is weekend and evening so this means I get 40% of the usage for 60p more. Not a great improvement :) however I never even use close to that 40% so its not really an issue for me. Ill just have less wasted usage. I should probably change to fttc for faster speeds for less money.

    Sorry though, not a business user but no plan to leave.

    ReplyDelete
  7. I have to say I'm not terribly concerned about the changes. I appreciate the honesty of the thing, especially not trying to claim it's part of the VAT rise like some others did and I'm strongly in favour of sustainable pricing that's viable in the long term - if I wasn't I'd be on one of those £2.50 all you can eat amazing headline deals.

    The thing that would probably kill it for me (and hasn't happened thankfully) would be a change to the peak/off-peak hours, which generally match my usage pattern spot on.

    The super-off-peak overnight rates are great and I'd be happy to opt-in to a "lowest of the low" traffic class during that time period if they ever became a problem.

    Out of interest with the 10Gb/s upgrades why is it not feasible to just use port trunking on 1Gb/s links? (I'm guessing it's pricing structure of peering points makes it not worthwhile perhaps?)

    ReplyDelete
  8. The 10Gb/s is going to be fun, and involve several stages. We really like the routers and LNS we have (FireBrick) but they are Gb only. We can split the load, but that has all sorts of interesting knock on effects (and session balancing and so on), and the commercials to BT on multiple links is bad. An aggregate 10G link makes sense split out on Gb ports to Gb LNS and routers in complicated ways, and that is sort of what we need. But we have to tack the transit and peering in Gb chucks and balance that too. Else we move to some 10Gb routing and multiple 1Gb LNSs divided up in some sensible way. All just a nightmare of planning and a lot more boxes.

    ReplyDelete
  9. I think my point maybe wasn't quite clear - I think you would be *really* proving yourself to be an ethical business if you had a script that could be run over the last (say) 12 months' usage, and contact any customers who would have needed more units on the new pricing with a personalised message, on the lines of "hey, you currently pay for 10 units. When the new pricing at http://aa.net.uk/news-2011-10.html comes in, you will need 11 units to sustain the usage you've been doing over the last 12 months."

    Just giving people that advance notice that they are going to get hit by more than the 30p/unit price rise, and that if this is a problem for them, they need to think about how they'll solve it (whether by paying more, cutting back usage, or switching ISP).

    My gut feeling is that the average customer will be pleasantly surprised that you've bothered to warn them personally of the effect this change will have on them - the ones who leave would have left anyway, when the price rise hits them, and the remainder will have that nice feeling that you're not trying to rip them off, you're trying to work with them.

    ReplyDelete
  10. I also applaud the openness - but the BE off-peak cut feels disproportionate. What brought me to A&A was quality and contract length. Cost wasn't and isn't the issue. Besides I had tried cheap and reaped the consequences. So maybe that makes you a Veblen service? If so the impact of price changes up or down will have smaller effect. Changes in perceived quality (good or bad) will have a larger impact perhaps.

    ReplyDelete
  11. You could always join the dark side and buy some Cisco or Juniper kit...

    ReplyDelete
  12. I have to say that A&A is starting to look quite expensive, especially for those of us who still have 20CN lines. For now I've cut the number of units we're buying, but we might have to migrate away in the future.

    I've been hearing rumours that a certain well known telco provides better support these days, so that also undermines the case for staying with A&A. :(

    ReplyDelete
  13. Farnz, I see what you are saying and yes, those emails are likely to be going out tomorrow based on this month's usage.

    ReplyDelete
  14. PeteX, hah, certainly not noticed that on the Residential Internet support side or the Business Land Line order line :\ Still pants. But cheap!

    ReplyDelete
  15. It's a bit annoying for those of us stuck on 20CN (my exchange had a projected date for 21CN of 2010Q3, but it disappeared from the site well before that and there's currently no date shown - Market 2 is no fun!).

    For us it's just a 60p/month increase, with nothing extra, and an even wider gap on daytime allowance between us and 21CN & Be than before.

    If we can't have any extra daytime allowance, how about being able to carry over more than one month's worth? Or being able to carry it for more than one month? (That way my uneven usage when I go away for a month would be more spread out)

    Cheers, Howard

    ReplyDelete
  16. Actually, I have changed daytime from 1G to 1.25G from next month.

    ReplyDelete
  17. Ah, it doesn't say that on the price-change news page - I withdraw my message above!

    Thanks, Howard

    ReplyDelete
  18. I know, it was a last minute decision.

    ReplyDelete
  19. I have to admit, I've only just noticed this change today on receipt of my direct debit notification email. Will teach me to check the news page more often.

    Being stuck on a 20CN line buying 4 units, my charges overall have gone up by £1.20 a month, but at least I've had the little daytime allowance increase.

    The service has been nothing short of excellent in the few months I've been using AA, and I have no plans to move.

    ReplyDelete