Early exit fee

[#1]

Can someone please workout my early exit fee? I currently pay £33.99 a month and have 22 months left on my contract 🙈

[#2]

A very quick calculation is: monthly payment x number of months remaining - but to get an accurate figure, you will have to call Plusnet.

[#3]

@katiemae1 

What's prompting you to leave?

Maybe if you describe your issue(s) someone here can help resolve them?

[#4]

@Mav As the original question merely asked for the cost of ETC's, it is possible the OP doesn't necessarily have a problem we on here can solve - it maybe they have been made a better offer/are moving abroad, or any number of other reasons, which is why I just answered the posted question. IF they come back with more information...

[#5]

@jab1 

"A very quick calculation is: monthly payment x number of months remaining"

It might be quite a lot less than that:

My Plusnet contract is due to end in April next year, so about 6 months away.

I currently pay £29.13 per month for FTTC 80/20 broadband and phone line. A couple of days ago, when I asked PN, my ETC was £95.96 and is decreasing by approximately £15.93 every month.

"but to get an accurate figure, you will have to call Plusnet."

Definitely do that!

.

[#6]

@Mr_Paul I am aware that it could be a lot less - I know when I left, with 2-3 months left on my 12-month contract, I actually budgeted for about twice the actual final payment, but I had been a customer for a long time, and was paying peanuts for my then ADSL2+ connection.

As we don't know hoe PN arrive at the ETC figures, as you say, the only way to find out is to ask.

[#7]

Here is a link to PNs ETC page.
How we work out Early Termination Charges | Help | Plusnet

The problem is that we, the customers do not know what PNs savings per month are due to you leaving (e.g. wholesale costs) but as @jab1 says they ETCs are likely to be a lot less than the monthly cost. When I left three months ago, albeit within in the last two months of my contract, the calculation seemed to imply, as best I could understand it, as there was no breakdown given, that the monthly ETC was about  two thirds of my monthly contract cost. As has been said, ask PN directly to find out accurately.

[#8]

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@jgb wrote:

... as best I could understand it, as there was no breakdown given, that the monthly ETC was about  two thirds of my monthly contract cost.

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AIUI the cost of not providing the service must be deducted from the value of the residual contract to term.  That cost should include the actual service (broadband and phone supplier costs) and ought to have some notional consideration of the cost of managing the service (billing and customer service savings) but I doubt it is done.  The charge cannot be a penalty charge but only be mitigated losses - that is their lost profit.

ECTs being 2/3rds of the full monthly charges suggests that - contrary the the many claims of these services being priced with thin profit margins - something is not transparent.

I suspect that somewhere in the calculations is an aggregation of the up-front contract and provision costs; if that is the case then the ETCs for a second or third (etc) contract ought to be lower than those for a first contract.  A re-contracting customer has a far lower start-up cost than a brand new customer ... a fact often lost on marketing when it comes to customer retention.

In a transparent world, we would know (and be charged) up-front set up fees (which are non-refundable) and pay the real (somewhat lower) charges for the service delivery month by month.  That way the business covers its real up-front costs from the start and users get a fairer deal through out the life of the relationship.  The issue is that we get conned by our greed ... like a cash back up-front rather than a lower price through the period of the agreement.  On a 12 month contract £30pcm with £60 cash back is the same as £25pcm which in the long run is better for cash flow ... but the marketers feed on people's greed (and possibly ignorance!).

[#9]

I can't remember the details - it is a while since I left - but PN had been in effect, paying me to use the service for a time prior to my departure.

[#10]

@Townman 

Don't forget that PN say they deduct their costs, e.g. the wholesale charges from OR as well as other costs such as their own on-costs, and so the ETCs being around two thirds of the monthly contract cost is still consistent with "thin profit margin" while allowing PN to recover their lost profit etc. 

If I recall correctly the email I received from PN on signing up to my last contract with them did spell out the monthly ETC and it was somewhere around the two thirds mark CF the then monthly charge or even lower.

[#11]

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@jgb wrote:
...so the ETCs being around two thirds of the monthly contract cost is still consistent with "thin profit margin" while allowing PN to recover their lost profit etc. 

Not sure that I follow the line of reasoning here ... if the ETCs are net of costs and thus represent lost profits ... then the profits being 2/3rds of the monthly charge is not what I'd recognise as "thin".  It borders on obese!!

As I said, the contract and ETC models are not transparent, we have no way of knowing how the upfront costs are amortised over the length of the contract.

[#12]

As @Townman says the calculation of ETCs is far from transparent. PN says they deduct the costs they no longer incur when the customer leaves. Presumably they still apply the costs that they incurred in administering the contract which probably, as suggested,  will have been spread over the original contract period. Due to commercial confidential matters, PN will not give out the info needed to make interpretation of these conditions clear. However, if, on starting a contract,  PN did spell out (as a per month charge) the ETCs that they would apply, then customers would know what they would be charged when they agreed the contract and would not have to interpret ambiguous conditions. 

One puzzling thing I encountered was that when I got the "sorry you are leaving" email it quoted ETCs  that I could not in any way reconcile with my monthly contract costs based on any reasonable interpretation of PN's webpage or the email I received on agreeing the contract. I rang  the COT and almost immediately the staff member said that these ETCs had been wrongly calculated by the system based on my out of contract prices. I had endured numerous billing issues in this last contract with various remedies applied and so I can believe that the contract record in the system were less than perfect!. He then credited my account with a sum to correct this. That begs two questions - why were ETCs being applied if the system thought I was out of contract as PN had the requisite notice; and  if the ETCs vary depending on monthly charge they must mostly represent foregone profit as that will vary considerably depending on the actual monthly charge.

[#13]

With the OP’s contract running over two yearly £3 per month bumps then one might assume that this will be reflected in a considerable bump in profit, hence the ETC, for these years.

[#14]

I have just looked at the email I received when recontracting for my last PN 18 month contract in January 2023. The contract price for my line rental was £21.99 with fibre broadband at £0.00 per month. I also had unlimited UK & Mobile calls at £10.28 per month. Somehow PN's wonderful system managed to total that to £32.24 per month!

The ETCs were stated to be £13.61 per month (I assume those were only for the line rental and broadband and not the call plan which was on a monthly rolling basis. That is 62% of the line rental and broadband monthly charge.

The annual increase to be applied was CPI plus 3.9% and reference to the online PN "CPI plus 3.9% Guide" says that the ETCs will also increase by that amount.

On that basis, my ETCs will only increase at CPI plus 3.9% and so the whole additional "profit" resulting from that increase to the monthly cost will not apply in full to the ETCs. i.e the increase in ETCs will be 62% of the increase in the monthly in contract charges. 

I cannot find any information on the PN site regarding how they specifically apply the later £3 per year increase to ETCs - i.e whether it is pro-rata as the earlier method of increase of the whole £3 gets applied to ETCs.  The PN ETC Guide (updated 30 August 2024) only mentions the previous version of the annual increase and not the current one!  All clear as mud.