What Are No Contract Daily Plans?

On the prepaid wireless plans page I list Daily plans after Monthly plans, which may not seem intuitive.  In other words, you would think that the progression would be from Pay As You Go to Daily to Monthly to Unlimited.  Yes, that would certainly seem to make sense!  However, I listed Daily third because this type of plan was introduced into the market AFTER the Monthly bucketed plans.  So think of the list as an evolution of prepaid wireless products that were launched over time.


At this point you might be asking yourself why Daily plans were launched after Monthly plans?  The reality was that Monthly plans provided a lot of value over the classic pay per minute (PAYG) type of plan, however, paying on time each and every month for a Monthly plan proved to be difficult for a lot of customers.  Enough so, that prepaid wireless carriers wanted to offer customers a plan that would provide greater value than PAYG, but more flexibility than paying a larger amount on a monthly basis.  So the spirit of Daily prepaid plans is to provide you with greater flexibility.  So while you don't get the same value as a Monthly plan, you'll get better value than a pay as you go plan.  Here are some common features of these plans to look out for:

• Is the plan subscription or pay-per-use?  This is a critical point.  A subscription plan means that you put money into your account (ex. $10), and each day, whether you use your phone or not, your daily charge is deducted from your account (ex. $1 per day).  If it's pay-per-use, if you use your phone on that day (for anything), you'll be charged the daily fee (ex. $1 per day).  Iif you do NOT use your phone at all that day, you will NOT be charged anything.  If the rate for these two types of plans are the same, you'll definitely want the pay-per-use plan over the subscription plan.  In fact, generally speaking, I would recommend staying far away from the subscription model as it rarely tends to provide a better value than a Monthly plan.  Yes, it does allow you the flexibility to pay on a daily basis, however, I would say that if you're struggling with a monthly payment of $25-$30, don't let the low cost of paying for a daily plan trick you into thinking that you're saving money over the month.

• What are the rates?  Sometimes these plans simply give you discounted rates.  For example, pay $1 per day and get 5 or 10 cents per minute instead of 15 or 20 cents per minute.  However, more often Daily plans will now give you a bucket of minutes or even unlimited minutes.

• Pay attention to the clock!  What I mean by this is that while your daily fee usually applies to a 24 hour period of time, sometimes it's a 24 hour day, such that if you use your phone for the first time at 10pm, you'll only have the included services for two hours until the end of the day at midnight.  That will virtually never provide good value, so make sure you understand what the carrier defines as the clock.  Unfortunately, this may require that you read some of the fine print.

• What other services are included?  Look for other charges for voicemail, wireless Web, text messaging, etc.

Overall, I'm not a huge fan of Daily prepaid wireless plans.  I would say that you're either an occassional user that fits nicely into a PAYG plan, or you're a heavier user that can find a Monthly plan that fits your needs.  This didn't used to be the case, however, with the tremendous number of options now available for Monthly plans, it has become more and more true.  To me, Daily plans seem to be somewhat lost in the middle.  That said, for some people a Daily plan can offer tremendous value, so just be sure to really understand what's included in the plan, how it works, and most importantly, how it fits into your daily needs!  Lastly, note that a lot of prepaid carriers have been eliminating these plans because they tend not to be very profitable.  So finding one, and a good one, is becoming more difficult.

Are Daily Plans As Good As Dead?
Ok, maybe stating that Daily prepaid wireless plans are dead is a little extreme at this point, however, they really are lack luster in terms of value. We've seen a number of prepaid carriers outright eliminate their Daily plan in recent years. The fact is that they tend to not be profitable if priced too low. At that lower price point, customers love Daily plans. Particularly if they let you only pay the daily charge on days that you actually use the phone. Those are the ultimate plans. Unfortunately, customers who realized that took advantage of them (i.e. they used them!). Carriers quickly realized that these plans didn't make sense to support, at least not at the initial price points.

So, they increased the price, which resulted in a virtual elimination of the great benefit that they offered. Others not only played around with pricing, but also changed features such that lower priced plans were no longer unlimited. This approach enabled carriers to be profitable. But generally speaking, carriers don't feel that Daily plans are a core part of their business. Unfortunately, managing any type of plan as an afterthought usually doesn't yield a positive outcome in terms of value or user experience.

Why, then, do carriers still offer Daily plans? The fact is that while some have discontinued them altogether, there's still a respectable number of choices out there. This plan type was introduced for a particular need, which is to serve those who want more value than a pay-as-you-go plan can offer, but can't afford a full monthly plan. In other words, you may not have $40, $50, or $60 in your pocket, but most of us have two or three dollars that we can scrounge up on any particular day. So even if you normally buy a monthly plan, but one month you're running short, you can always fall back to a daily plan. This keeps phones being used, rather than increasing the probability that we may just change to an overall cheaper carrier, or cancel service altogether.

While that logic still makes sense, for at the end of the day it's, well, logical(!), it doesn't seem to play out that way in the real world. It's really a carrier paradox. Make the plan appealing and it can quickly become unprofitable. Make it profitable, and it quickly becomes unappealing to customers. Carriers that charge you the fee everyday, regardless whether or note you use your phone, can more easily maintain profitability. However, it's such a poor, and non-intuitive customer experience, that these plan structures usually aren't very successful.

That said, carriers have been having difficulty outright killing these plans. They continue to tweak them here and there, adding and taking away value until they feel they have found the sweet spot. Personally, though, I don't think a sweet spot exists. I can come up with one for customers, but not one that would truly be profitable for carriers (surely anyone could do that!). As such, I expect that we'll see prepaid carriers continue to veer away from this plan category. It's simply too complex (not to mention annoying) to support!

In the meantime, I do encourage people to review available Daily plans. Depending on your particular needs, they can actually be quite compelling, particularly for occasional users who select a carrier that only charges on days used.


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