Wranglin’ an RFP – Part 3 of 3

This is our final continuation in our “Wranglin’ an RFP” blog series. We strongly suggest that you read Part 1 and Part 2 before diving into Part 3.

STEP 6 – Know your numbers, then ASK for stuff again

If your corporate budget requires a 20% reduction in spend, make sure to let the carriers know your numbers and how far off they are. Frequently, with a good business case, they can go back to their pricing folks and get stuff if they know it will take “$X”.

We had a great relationship with a carrier working on an RFP and we simply said, listen, we need $X to get the job done. It was a significant number, but it was an accurate one and it worked. The carrier came through, got their contract executed and we got a great deal for the customer.

Consider 2 industry definitions:

CPGA (Cost per Gross Add)
What it costs the wireless carrier to add you as a customer recorded in per subscriber terms. Average CPGA across all carriers is $350-400: this is the cost to acquire a new subscriber.

  • This number covers ALL costs (yes, including the subsidized price of the device!) which includes commissions paid to agents/employees, (we’ll say it again) phone subsidies and marketing costs.
  • So this means that if you get a free device, on average, the carrier is down $350 (per subscriber) when you sign up with them and they need to earn this back to become profitable.

Mix this with your:

ARPU (Average Revenue Per User) 
Measurement by the carriers to understand the value of their subscriber base and compare to other carriers as a metric.

  • It is the measurement of the average dollars spent per month by each subscriber across their subscriber base.
  • It is calculated by taking the total revenue (what we at Bill Police call “all in”. This number includes taxes, fees, assessments, etc and is the total amount the user pays, not just the access fees as are so often quoted to customers by carrier reps) and dividing it by the number of total users. For example, if carrier X has 100,000 subscribers and the revenue for these subscribers is $5,000,000, then the ARPU is $50.
  • Determine your ARPU and use this against CPGA to help you bargain even further

STEP 7 – Read the agreement in full

This is so simple, yet so many organizations neglect reviewing the agreement and detail.

Simply put: read the ENTIRE agreement, line by line and be sure all that was agreed to during the negotiation is in the final agreement. There have been many times we have negotiated an item and it is mysteriously missing or changed in the final document.

STEP 8 – Implement

Again, simply said, not so simply executed: do what the agreement says.

In all of our contract negotiations, I can tell you that not in one case did all the items in the agreement show up properly on the bill. Expect that there will be mistakes, review the bill carefully (especially the first month after the agreement is in place) and request credits immediately from the carrier.

Wireless Savings Calculator

Leave a Reply