December 1, 2010

When an AT&T Prepaid Data Plan Will NOT Save You Money

Believe it or not, there are times when purchasing a data package will NOT save you money. But they can also save you quite a lot. Data packages will not save you money when you use so little data during the month that, even at the pay-per-use-rate, it would have cost less than the package itself. For example, let's say that you purchase the 1 MB package for $4.99, but—for the whole 30 days—you use only 104 kB total. Without a package, 104 kB costs only $1.04 (if you are using AT&T's prepaid service). But, since you purchased the package, you spent $4.99. This means that, instead of saving you money, the package costs you $3.95 ($4.99 - $1.04) more than you would have paid had you not purchase the package at all.


When It WILL Save You Money

You don't have to use the entire package in order to save money, however. You only have to use a little bit more data than the amount that would have cost the same as the package at the pay-per-use rate. Sound confusing? It might help to consider some examples. Below, we will look at the three data packages offered by AT&T and find the point at which we start saving money with them—that is, how much data do we have to use before the packages become a better deal than the pay-per-use rate.

The 1 MB package. The 1 MB package costs $4.99. At the pay-per-use rate of one cent per kilobyte, it would take 499 kB in order to match the cost of the package. So, once you exceed 499 kB, you start saving money with the package. Since the 1 MB package gives you 1024 kB in total, it's kind of like getting 525 kB for free (1024-499 = 525).

Without the 1MB package, 1 MB of data would cost $10.24 at the pay-per-use rate. So, if you end up using the entire package, it saves you $5.25 in data charges ($10.24 - $4.99 = $5.25).

The 100 MB package. The 100 MB package costs $19.99. At the pay-per-use rate of one cent per kilobyte, it would take 1999 kB in order to match the cost of the 100 MB package. So, you would have to use more than 1999 kB in order to start start saving money with this package. Since the 100 MB package gives you 102400 kB in total, it's kind of like getting 100,401 kB (about 98 MB) for free.

Without the 100 MB package, 100 MB of data would cost $1024. That figure is so big I believe it needs explanation. How did I arrive at $1024. It's a bit complicated, but here's how I did it. There are 1024 kilobytes in every megabyte. There are 100 MB in the package. So, there are 102,400 kB total in the package (100 x 1024). Each kilobyte costs one cent; 102,400 kB would cost $1024 (102,400 x $0.01).

So, if you end up using the entire package, it saves you $1004.01 ($1024 - $19.99).

The 200 MB package. The 200 MB package basically cost $15.00 (read more about the 200MB data package to see how I figured that). At the pay-per-use rate of one cent per kilobyte, you would have to use 1500 kB in order to match the cost of the 200 MB package. So, you would have to use more than 1500 kB in order to start saving money with this package. Since the 200 MB package gives you turn 204,800 kB in total (1024 x 200 = 204,800), it's like getting 203,300 kB (about 198 MB) for free.

Without the 200 MB package, 200 MB of data would cost $2048. So, if you end up using the entire package, it will save you $2033 in data charges ($2048 - $15).


Summary

To save money with a 1 MB package you need to use 500 kB or more (without exceeding the full 1 MB).

to save money with the 100 MB package, you need to use 2000 kB or more (without exceeding the full 100 MB).

To save money with the 200 MB package, you need to use 1501 kB or more (without exceeding the full 200 MB).

For more general information, you can read my article AT&T prepaid data packages.

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