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What to do About Early Termination Fees

Navigating Around the Pain

Traditionally, the way consumers avoid early termination fees (ETFs) is to wait out a standard two-year term agreement to upgrade. Because businesses have more lines to juggle, there is greater flexibility around finding ways to minimize or avoid ETFs. Termination fees typically decline on a straight basis aimed at expiring coincident with the contract termination date. With fees upward of $325 – $350 for smartphones and $175 – $200 for standard phones, ETFs are simply an unpleasant cost to absorb and in many cases unnecessary. Below are a few techniques that can help organizations to reduce or avoid ETFs.

Negotiated Waivers – depending upon the volume of business with your carrier(s), you may have sufficient leverage in your contract to negotiate a specified number of ETF waivers. These waivers can be used through the course of the year to zero out any ETF fees until you have exceeded the negotiated count.

Upgrades Against Zero Use Devices – if your device count is consistent or increases over time, in lieu of consuming an upgrade from an eligible active line, you can utilize an available upgrade from a zero use line to avoid the cost of an ETF or paying out the duration of the device’s contract. This savings opportunity arises out of a 2-4 month window when upgrade eligibility kicks in before contract termination. This has the duel benefit of stockpiling upgrade credits on active devices while avoiding the final month’s cost on zero use devices.

Device Reuse For New Activations – when you have controlled processes that highlight devices of employees leaving the company, new activations are then filled using the highest quality returned devices along with their unneeded service lines to avoid ETFs as well as the cost of a new device. Cost-conscious companies can be effective by developing a culture that not everyone needs the latest model to perform their job.

When ETF Is Less Than Monthly Service Cost – through a simple calculation, it can be determined if reducing the device to a minimum plan will be less than paying the ETF. However, there will also be instances where a declining ETF will become less expensive than the accumulation of the remaining monthly service charges. This option would be necessary for organizations that are seeing an overall decline in the number of wireless devices in use.

There is no reason to pay the carriers unnecessary ETF fees, but it takes strategy and planning to ensure cost savings success.