Here’s how to cut your cable and cell phone bills

For many of us, the idea of negotiating a bill is a completely foreign concept. At best, it sounds naive to imagine your service providers will give you a break just because you ask—and at worst, it calls to mind the type of Scrooge who insists on celebrating wedding anniversaries at restaurants with BOGO coupons.

But negotiation is neither doomed to failure nor the sign of a cheapskate. In fact, negotiating can be a relatively quick and easy way to reduce your expenses without changing your habits. The trick is to know which bills are negotiable and what tactics to use to set yourself up for success.

Here’s what you need to know about negotiating your bills successfully.

Why Businesses Are Willing to Negotiate

Service-based businesses, like cable companies and cell phone providers, are generally willing to entertain price negotiations. But why are these prices negotiable when the cost of milk or gasoline is not?

There are some important economic factors working in your favor with these bills.

Consumer Inertia

If you’ve had the same internet service provider (ISP) for more than six months, it’s likely you’re paying a higher rate today than you did when you signed up. That’s because ISP pricing is designed to draw in new customers—while relying on consumer inertia to keep existing customers in place after prices go up.

There’s a great reason for this pricing structure. A Harvard Business School study found that approximately 64% of consumers tend to stick with gasoline brands they have already purchased, even though the cost of switching is relatively low. The level of consumer inertia is likely to be higher when switching requires research and a phone call (as it does with changing ISPs) rather than simply visiting a different gas station.

That gives customers who are willing to do a little work to negotiate a leg up over the customers who let inertia drive their decisions.

Attraction versus Retention

Studies have shown that it costs businesses up to 25 times more money to acquire a new customer compared to keeping an existing one. Cable companies, ISPs, cell phone providers, gyms, and other service-based businesses offer low introductory rates to attract new customers—who will quickly become existing customers who stay because of inertia.

These business costs give you another advantage in negotiation, since it clarifies your power. Your service providers are willing to work to keep you since keeping your business costs them much less than finding a replacement customer after you leave.

How to Negotiate with Service-Based Businesses

With the understanding of consumer inertia and the cost of acquiring new customers, the playbook for negotiation is relatively simple.

Internet or Cable

If you have ever tried to cancel internet or cable service, you know how pushy the representatives can be in trying to get you to stay. This is helpful to remember, especially if you live in an area with little competition since it means there is still room for negotiation.

To get a lower price, follow these steps:

1. Research the lowest rates. Whether the lowest prices are those offered to new customers by your current provider or are the prices offered by a competitor, make sure you know the best rates available in your area before you call.
2. Ask nicely. No one enjoys being on the phone with customer service representatives, and that often comes out as annoyance or exasperation at the people who are just doing their jobs. Being pleasant and polite will go a long way to having the representative help you as much as they can. But don’t give up if they can’t/won’t lower your price.
3. Ask to speak to cancellation/retention. Many ISPs and cable companies only give the customer service reps working in the cancellation or retention department the authority to make deals. That means asking to talk to someone about canceling your service can often get you to a representative with the power to negotiate. This can be especially helpful if there is an alternate provider in the area you’re willing to switch to. But even if your local provider has a de facto monopoly, you can still ask to talk to a supervisor about matching the new customer price as a reward for your loyalty.
4. Verify the change. Within a day or two of successfully lowering your monthly price, check your account online or call back to double-check that the change has been made.

Cell Phone

Though the two-year cell phone contract has thankfully gone the way of the dodo, cell phone service providers still tend to lock consumers in with installment plans for the phones themselves. Under installment plans, you are required to pay off the remaining balance for your phone to be able to leave with it. This makes it harder to negotiate—but not impossible.

Here’s how you can lower your cell phone bill, even if you are on an installment plan for your cell phone.

1. Research rates and offers. As with your ISP, coming to the negotiation with knowledge of your provider’s lowest rates, as well as the competition’s rates, will give you standing to ask for a lower price. You may also find that a competitor is willing to offer you several hundred dollars to switch, which could buy out the remaining balance of your phone installment plan.
2. Remind the provider of your loyalty. Your longevity as a customer represents a great deal of money the company has not had to spend on acquiring new customers. Pointing out how long you have been a loyal customer makes them more likely to work with you.
3. Be prepared to cancel. Even if you are not financially able to cancel right now because of the installment plan, having a plan in place to cancel the service when you can will give you the upper hand in a negotiation.
4. Go up the chain of management. As with your ISP, it’s likely that the front-level rep may not have the authority to grant your request. Don’t be afraid to ask to speak to their manager.

Flex Your Negotiating Power

While it may seem like the giant service providers hold all the cards, you have more power than you think. It just takes a little time to research and then call your service providers—and the more you practice negotiating, the better you will get at it.