The Costs of Not Understanding What Services You’re Buying, or Why

Guest post by Matt.

There aren’t very many people that truly understand their utilities, other than the end result. In other words, the lights turn on, your phone has a dial tone and receives calls and you can hop online to check your email with the internet. That’s really the extent of many consumer’s knowledge.

I guess that’s fine, so long as you don’t mind overspending for your home services, or having a service that doesn’t quite meet your needs.

But if you’re in the majority that doesn’t want to overspend, and wants services that does what you expect them to do, then that means you need to do a little bit of research. Some due diligence. You need to fully understand the products and services that you’re buying.

Lets look at a couple of examples so I can show you what I mean.

Example #1 – Internet Service for Gamers

So an example that I see time and time again of consumers not understanding what they are buying, and why, is when they buy internet service. And more specifically, when they are buying internet service for gaming online.

Consumers don’t understand how the internet works. All they know are “download speeds,” because that’s all that internet service providers put in front of them.

So what ends up happening is that someone goes out and buys the fastest internet, because they don’t think their games will lag while playing Diablo 3 or Call of Duty online. They’re spending $50, $75 or $100+ just for this purpose.

But if they did their research beforehand, they’d realize that the speed that internet providers advertise, is actually (also) bandwidth. And bandwidth has very little to do with how games perform online. In fact, you can play games just fine online with a 1.5 or 3 Mbps download speed, which you can buy for $20-ish per month.

What really matters for online gaming is latency. But latency isn’t something that you’ll find on an ISP’s website, because it’s not something that they have much (if any) control over.

Again, research and due diligence will go a long ways here.

Taking that a step further, someone who wanted to game online should also know that satellite or dialup internet would be the wrong types of connections to buy. They’d be much better off with a cable or fiber optic internet connection. What’s more is that they should avoid a wireless (only) connection. Fixed lines are much better for gaming online.

This is only one example, but hopefully you can see that with a little bit of research, a person who is buying internet to game online could save themselves $50 to $100 per month easily, not to mention the headache of having a service that just flat out won’t work for their specific needs.

Example #2 – Buying 3G Services

Another example that I have for you is something that I experienced about 7 months ago when I bought the wife an iPad for Christmas. During the purchase we were asked if we wanted a wi-fi or 3G model. Ultimately that comes down to whether we wanted 3G service or not.

I know this question would confuse a lot of people. At one point it did me, and on the website I run we’ve ran tests and noticed that it has other people, too. The source of confusion comes from the differences between wi-fi and 3G — no one knows what they are, or that there is any difference at all.

There is a difference though.

The difference between the two technologies is that 3G receives it’s signal from (cell phone) towers, just as your phone does. 3G costs money. Wi-fi, on the other hand, receives its signal from a hotspot or router, usually in a public location like a Starbucks or in your own home if you have a wireless network (you have to within this range to receive signal). Wi-fi, in most cases, is free.

But could you imagine not knowing the difference, or worse, the salesperson not explaining the difference? A data plan can cost $25 to $50+ per month, which is on top of your current internet and cell phone bill (at least in our case with the iPad it was).

Since we understood the differences between the two technologies, we opted to go with the wi-fi model. We determined that we wouldn’t be on the go enough (while being able to use the tablet simultaneously) to make it worthwhile, so we passed, saving ourselves $100+ on the device and $350+ per year for the data plan in the process.

A Buyer’s Checklist to What to Learn or Ask When Shopping for Services

I understand that learning about different utilities and home services can be difficult. There’s a lot to take in between the different options and/or lingo being used. And that’s on top of the usual stress that comes with shopping for new products and services. So to help out, here is a short checklist of things that you should look for, read or ask when shopping for a new service.

  1. Learn the lingo. Figure out what wi-fi is, what 3G is and the differences between the two. And not just the what, but why — why is wi-fi free when 3G isn’t?
  2. Determine what you need before you go shopping. By having a clear idea of what your needs are beforehand, you can filter through all the options to quickly find what will or will not work for you. Knowing what you want also makes research much easier and faster. Like my game example above — just do a search for what you need to game online regarding an internet connection. Apply that to any service that you want to buy.
  3. Don’t be afraid to ask questions. There are tons of forums online filled with people willing to help you out and answer your questions. If you’re out in public, ask a sales person to help out. Go to the tech counter if you have technical question to ask, especially if you suspect the sales staff to be commission driven. Tech people usually aren’t, so they don’t have much incentive to be sneaky or evasive in any way.

Overall, don’t be lazy and do the legwork. Don’t go off and just buy the fastest, biggest or most expensive service or product, or vice versa, just to quickly get through the buying process. And while it would be nice to count on the salesperson or service provider to give us the information we need to make an informed buying decision, you can’t count on it. At the end of the day, what you buy is ultimately your choice, and it’s in the best interest of you and your wallet to know exactly what it is you’re buying, and equally as important, why.

About the author: This post was written by Matt, co-owner of Plug Things In. Plug Things In has written detailed internet guides that help you understand how internet service works, what your options are and how to “plug into” them.

Allconnect is a free online resource to review and compare the costs and choices for essential home services, including home utilities, high speed Internet, phone, cable TV, satellite TV, and home security systems.

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