Long Distance Service - Price per Minute 

When are fundamental laws of mathematics no longer applicable? When is 4 greater than 5?  When your talking about long distance service, that's when.  Most long distance service providers tout their cost per minute.  However, when comparing costs, you need to read the fine print and do a few calculations.  Many long distance service providers, including the discount long distance providers, have other charges with effectively raise the cost per minute of their service. 

Many long distance companies charge a monthly fee in order for you to get a particular rate for long distance.   Other long distance service providers, have monthly minimums you must meet or you are assessed an additional charge.

The key to getting a good deal on your long distance service is to know your usage.  The key things to know, how many minutes do I use in a month, does it vary a lot from month to month, and are there particular states I place most of my calls to. 

Armed with this information, you can take the  “additional” charges you are likely to pay, divide it by your usage, and add that to the rate per minute your long distance service provider is charging you.  That will give you a true cost per minute which can be compared between providers. 

Some examples will probably help.  Lets help Mary, Joe, and Mike figure which of three plans to select.  The plans are as follows:

Plan A

$.04/minute, plus monthly fee of $5.95 

Plan B 

$50.00 for 1200 minutes, plus $.07/minute over the 1200 mins. 

Plan C

 $.10/minute, no other fees.

Each of them gets out their phone bills for the last year, and checks their long distance usage. 

Mary 

Mary used 14,400 minutes of long distance service in the last 12 months, an average of 1200 minutes each month.  She would use 600 minutes one month, than 1800 minutes the next, the pattern repeating throughout the year.  For Mary the costs of the plans would be: 

    Plan A  

    600 min. months: ($.04 x 600) + $5.95 = $29.95

    1,800 min. months:  ($.04 x 1800) + $5.95 = $77.95 

    Her total bill for the year: (6 x $29.95) + (6 x $77.95) = $647.40 

    Total cost per minute:  $647.40 / 14,400 = $.045/minute

    Plan B

    600 min. months:  $50.00

    1800 min. months:  $50.00 + ((1800 – 1200) x $.07) = $92.00

    Her total bill for the year:  (6 x $50.00) + (6 x $92.00) = $852.00

    Total cost per minute:  $852.00 / 14,400 = $.059/minute

    Plan C

    600 minute month:  600 x $.09 = $54.00 

    1800 minute month:  1800 x $.09 = $162.00 

    Her total bill for the year: (6 x $54.00) + 6 x $162.00) = $1,296.00 

    Total cost per minute:  $1,296.00 / 14,400 = $.090/minute

 Joe 

Joe also used 14,400 minutes of long distance service in the last 12 months, an average of 1200 minutes each month.  Joe used 1200 minutes each and every month.  For Joe the costs of the plans would be:

    Plan A 

    Each month:  ($.04 x 1200) + 5.95 = $53.95 

    His total bill for the year: 12 x $53.95 = $647.40

    Total cost per minute:  $647.00 / 14,400 = $.045/minute 

    Plan B 

    Each month: $50.00 

    His total bill for the year:  12 x $50.00 = $600.00 

    Total cost per minute:  $600.00 / 14,400 =  $.042/minute

    Plan C 

    Each month:  1200 x $.09 = $108.00 

    His total bill for the year:  12 x $108.00 = $1,296.00

    Total cost per minute:  $1,296.00 / 14,400 = $.090/minute 

Mike

Mike only used 1,200 minutes of long distance service in the last 12 months, an average of 100 minutes per month.  Mike used 100 minutes each and every month.  For Mike the cost of the plans would be:

Plan A 

Each month: ($.04 x 100) + $5.95 = $9.95

His total bill for the year:  12 x $9.95 = $119.40

Total cost per minute:  $119.40 / 1200 =  $.099/minute 

Plan B 

Each month: $50.00 

His total bill for the year:  12 x $50.00 = $600.00 

Total cost per minute:  $600.00 / 1200 =  $.50/minute 

Plan C 

Each month:  100 x $.09 = $90.00 

His total bill for the year:  12 x $9.00 = $108.00 

Total cost per minute:  $108.00 / 1,200 = $.090/minute

So Mary should use Plan A (4.5 cents/minute), Joe should use Plan B (4.2 cents/minute), and Mike should use plan C (9.0 cents/minute).  Three different people, looking at the same 3 plans, with 3 different results.  The lessons:  know your usage, and figure your cost per minute.