How We Calculate Savings

How We Calculate Savings

It’s only natural to look at the amount you’ve been paying a provider in the past and consider anything less than that to be savings, but the more accurate representation of savings is reducing the amount you are scheduled to be paying going forward. Almost all providers increase their service charges and fees annually due to “cost of business” increases, and discounts expire with no guarantee that they can be replaced with a discount of the same value. So saving money may look like paying less than you ever have in the past, but it might also look like preventing those future increases, diminishing the effects of those increases, or just anything that prevents you from paying the full amount you would be paying if you did nothing.

This is why our very first step in each negotiation is to estimate what your bill will be over the next year, so that we have a starting point for our negotiations that is as accurate as possible. We look at what you’re paying now for each line item, and we look for any expiration dates or scheduled increases that will affect that price over the next 12 bills. Often times this information is listed on the bill itself, but we also ask for the expiration date of every item over the phone with the service provider reps, since not every increase has a warning in print. Either way, once we have a full picture of the next year, we start negotiating a lower bill (see How We Lower Your Bill below for more information about the methods we employ).

Once we’ve wrapped up our negotiations, we compare what your bill was scheduled to be over the next year with what your bill will be over the next year now that we’ve negotiated. The difference is the amount that we’ve saved you on that bill.

A new discount with no scheduled increase

A straightforward example of a negotiation where there were no scheduled increases and we simply applied a $20 discount for the next 12 months would look like this:

You can see that the bill was set to be $100 over the next year, and we’ve lowered it to $80 by negotiating a $20 a month discount. This would be a $240 savings over the whole year.

A new discount with a scheduled increase

In the next scenario, there’s a scheduled increase over the next year that we’re unable to prevent, but we’re still able to apply that $20 discount:

Even though the bill goes up in month nine, our discount is still in place keeping it $20 lower than it would be otherwise. This scenario happens most often with annual increases or when pre-existing discounts are set to expire, and we don’t replace those discounts or prevent them from increasing. This would still be a $240 savings over the whole year.

A new discount that prevents a scheduled increase

The final scenario is when we are able to replace a discount that is set to expire within the next year with a discount of the same or greater value:

Here we see that the bill is $20 lower for the first eight months, but when the bill was scheduled to go up by $10 on month nine, we were able to prevent that increase and keep the bill the same. This means a $30 a month reduction on the last 4 months. This would be a total savings of $280 over the next year ($20 for 8 months and $30 for 4 months).

In all three scenarios the very next bill would have been $100 and we negotiated it to be $80 by applying a $20 discount. However, you can see how knowing what the bill will do over the next 12 months affects both the total savings we’ve negotiated and the price you can expect to see on your bill. This is why we calculate savings as the difference between what your bill is scheduled to be over the next year without any intervention, and what we negotiate your bill to be over the next year.

 

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