As a business providing connectivity services, there are the prepaid, postpaid and pay-as-you-go models for billing clients. The prepaid model provides some important advatanges: no late payments, easy model for end-users to understand and additional revenue.
Creating a perfect proposition that works for you and for your client can be tough. Sometimes, you’ll get usage estimations that are not met by the client. Or the data usage is too high resulting in a higher cost than you expected, or too low, where you didn't meet your expected revenue.
Telecom providers l give you the choice of a pay-as-you-go or post-paid model. This has been the standard within the telecom world, but these models do not fit the needs of every user. The third option that is not commonly available is the prepaid model. The prepaid model requires special tools that most telecom providers do not have. Prepaid gives the client a few options allowing him to choose that which matches his needs best.
What this does is bring an added value to the client. Clients can top-up the bundle whenever they need so if they are never without data. They can just purchase it and have it directly loaded on their SIM. This ensures that when the client has a big project, they can easily add more data when needed saving him time by not needing to contact an account manager to increase a post-paid limit. Also, clients save time and costs on support and management needed to monitor the SIM cards.
Pay-as-you-go and post-paid also create the risk that users can go over the bundle that is given. This is a big risk since clients might refuse to pay the high overage charges leaving you stuck with huge bill that cuts into your profits.
Prepaid, eliminates this risk. Clients will need to top-up their SIM for it to work. And if the bundle is finished, they will be shut-off until they top-up.
What this also does is eliminate the additional tasks that are done to calculate the overage or higher usage data cost. The clients receive a quote for each bundle and receive their invoice directly to them when they proceed with the top-up. Being directly serviced and saving your business time is a win for both parties.
The best part of a prepaid service is that effectively it restructures your contract to create new business opportunities and subsequently additional revenue. What before was an onerous monthly task and a significant impediment to rapid growth becomes a simple automated task. There is no longer a need to track usage across multiple SIMs and clients
For a few lines, this would be fine, but scaling your product is a logistic nightmare. Using prepaid in this case would ensure that the client will pay for all the data that is used, and refill or renew the data bundle as needed.
And to top it all off, prepaid gives you added profit on the un-used data. On average users only consume 70% of their bundle data This gives your business 30% more profit. for each data bundle that is bought.
Of course, there are advantages to prepaid but there are some disadvantages as well:
- 1. Client needs internet to top-up the bundle.
- 2. The bundle might not always fit into what your client wants and is forced to top-up more than what is needed.
- 3. Client might not want to pay for data up front.
Managing your contract, the pay-as-you-go way is often very risky in this current day and age, as at any time a company can just go silent or bankrupt and you are stuck with their bill whether small or large.
Prepaid gives the client the possibility to pay for what they think they need to use, giving them the flexibility to decide what they need. They can top-up when they need additional data giving them flexibility and ease to scale up or down as needed. It saves time as you do not need to bill your client and avoids high data bills if a client has a spike in their data usage. It brings an additional revenue by profiting on any unused data.