Larry Bonura's Blog

Random thoughts filling my brain

How Much Is That Mobile Device in the Window?

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The sticker price of your mobile device, minus any discount, is just the beginning of your total cost of ownership (TCO).

Calculating the TCO is a way to determine the real price of using your device. It is also a way to justify why you think your company should provide one for you. And it’s kind of fun to keep track of the expenses. Well, it can be fun, an a bit sobering, too.  According to a recent Network World study, it costs $3,000 to $4,000 a year to own a cell phone.  Let’s see how well I do against that figure.

The TCO is a formula:

Original Price

– Discount

+ Purchased Software

+ Hardware Add-ons

+ Carrier Fees & Taxes

+ Data Plan

/ Time Period

Price you paid for your smartphone

Discount for signing long-term contract

Any software you have added to the device

Any hardware you’ve purchased as add-ons

Your cell phone provider service fees

Cost of accessing the Internet

The length of time you have been tracking the expenses


The easiest way to track your expenses is with a spreadsheet that you can carry with you on your device so you can easily access and enter information or see the TCO at any moment.

I’m going to share the spreadsheet I use to track the expenses. My first device was a Dell Axim x50v, which did not have a phone. I tracked that devices costs also, just for comparison and because much of the software I used for my Axim was also used for my xv6700, which I now have. My provider for the xv6700 is Verizon Wireless.

Here is a sample of my costs of ownership for these devices:

pda_expenses1

As you can see, my costs are broken down into categories, to better see how my expenses were spread out. I tracked my expenses solely for each device, and then I added a column to track the true expenses for my current phone, the xv6700, by adding the items I purchased for the x50v to those of the xv6700.

Here’s how expenses looked as a percentage for each device in the spreadsheet and a bar chart:

percent_each_device

percent_each_device_graph

But that is a bit deceiving. The x50v shows a greater cost for hardware, software, and accessories, while only the xv6700 shows only costs for service. If you look at the figures on the right, they appear more in line with the truth. Here, I added the total expenses of all hardware, software, and accessories that I spent on the x50v that I also use with the xv6700. Now the figures show that the hardware and software dropped while accessories remained relatively flat. And the service dropped from 56% to 44.5%.

Here’s how these look graphed:

percent_xv67001

percent_xv6700_graph

dollars_xv6700

percent_xv6700_graph1

And if you calculate your per-monthly cost and divide the total cost by 12 you come up with $161.83.  Now, that’s the true cost of your cell phone!

That’s it. Not too complex, but very educational. Remember the next time you use your mobile device: The cost isn’t all up-front. Most of it is spread over time.

I’d like to hear from you on how you track your TCO. Please share your insight, concerns, and thoughts with the rest of us.

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Written by Larry S. Bonura

2 May 2009 at 07:52

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