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Plusnet changes to pounds and pence model to ‘simplify’ bill increases

Plusnet changes to pounds and pence model to ‘simplify’ bill increases
Matt Browning
Written By:
Posted:
11/07/2024
Updated:
11/07/2024

Plusnet has announced it will calculate bill increases using a new pounds and pence model, in a bid to make its pricing clearer for customers.

Any planned increases will no longer be shared as a percentage based on the variable Consumer Prices Index (CPI) plus 3.9%.

This is so customers “have certainty when it comes to the cost of our products and services from year to year.”

The changes will apply to new and existing customers who take out new contracts from today (11 July 2024). Meanwhile, the planned increase of £3 will be applied to your broadband bill every 31 March from 2025.

It means that if you take out a new broadband plan at £25 per month on a 24-month contract, your price will be £28 per month from 31 March 2025, and then £31 per month from 31 March 2026.

The provider noted: “We think that our new pricing model will be much clearer for customers and give them more certainty on what their price change will be.

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“This approach also aligns our pricing with Ofcom’s approach [and] recommendation on mid-contract price rises.”

However, if you stay on the same contract, the old system of CPI rate plus 3.9% will remain.

It comes at a time when mobile and broadband customers have felt a £14.4bn price hike in what Which? described as “outrageous” mid-contract price hikes, and follows parent company BT and rival Vodafone in making the switch of calculating the bill rise method.

Uswitch ‘welcomes’ the move

Ernest Doku, telecoms expert at Uswitch.com, has praised Plusnet’s change to a pounds and pence model.

Doku said: “Uswitch welcomes the greater clarity given to consumers by Plusnet’s decision to change to a ‘pounds and pence’ model for future mid-contract price increases. The new model provides certainty when it comes to the cost of your contract and makes it easier for customers to manage their finances.

“In line with other providers, Plusnet’s new model will see it apply mid-contract charges at a flat rate for all customers, which is a yearly increase of £3 per month. While this approach does offer simplicity and certainty, customers on cheaper tariffs will see their contracts increase by a greater percentage, relative to the initial cost.

“For example, deals that cost £20 a month initially will see a yearly increase of 15%, whereas deals that cost £30 will see an increase of 10%, meaning some customers may end up paying more than they would have when they were inflation-linked.”

Doku added: “Like other providers, Plusnet’s change excludes existing customers and out-of-contract customers, who will still be subject to inflation-linked and percentage-based price hikes come next year.

“As Ofcom is expected to rule on banning inflation-linked increases in the near future, we will likely see more providers make similar announcements to this. It will be interesting to hear Ofcom’s actual ruling in light of these recent changes, which see providers trying to take a balanced approach ahead of the hard and fast rules coming into place.

“If you are signing up to a new contract, carefully review the terms related to mid-contract price rises to make sure you’re clear on the total cost. There are also some providers who don’t raise their prices mid-contract, so it could be worth exploring what’s on offer elsewhere.”