tips

Running the numbers on your early termination fee

Michael Goldstein • April 3, 2014

I just noticed it today, but on March 20, we passed $100,000 in Ting credits issued through our early termination fee (ETF) relief program. More and more people every day are taking advantage of our 25% reimbursement when they break a current contract early to come to Ting and we could not be happier.

I think people are starting to realize that the one-time cost of the ETF (minus our 25%) is often less than what they would save in those remaining months if they were on Ting.

Our savings calculator can actually figure that out for you. Perform your initial calculation based on what you use and spend each month and then the next page allows you to layer on the cost of your ETFs based on your current provider and the months left on your contract.

But it might be enlightening to unpack the formula. I’m also looking for an opportunity to flaunt a little 8th grade algebra. So here goes:

s = projected monthly savings with Ting versus current carrier
m = number of months left on your contract

I will multiply the cost of the ETF by .75 since we will reimburse you 25%.

ETF with Verizon (I’ll pick on them since they are biggest):
$120 + ($10 x months left on your contract)

(You can get all the details on carrier ETFs here.)

So, you should switch to Ting immediately if:

sm > ($120 + $10m) x (.75)
s > ($90 + $7.50m) / m

Here’s what that looks like by month (per device)…

This wasn’t obvious to me until I looked at it. There is a whopping minimum ETF of $130 if you have just one month to go on your contract. So it is nearly impossible to justify breaking a contract one month early and pretty tough to make the case two or three months early. But the math looks better and better the longer you have left in your contract. (If you signed a contract last month and are looking at Ting, the math is easy but you have serious commitment issues.) Based on the savings customers have been reporting back to us, it seems like it should be a serious consideration if you have four or more months left on your contract.

If you have questions about this doing this calculation for your carrier and your potential savings with Ting or you need help with the process of breaking a contract, please ask us. We are happy to help.