Choosing a wrong mobile communication price plan: An empirical analysis of predictors of the degree of tariff misfit among flat rate subscribers in Germany

Worldwide, more and more users of mobile communication services (MCS) are in tariffs which decouple the level of customer usage of one or several MCS (voice calls, Internet access, SMS) from the fixed monthly charge of mobile network operators (MNOs). However, consumers may inappropriately subscribe to such a flat rate because other usage-dependent price schemes are available which more closely match with their MCS use patterns. Surprisingly, little research has examined how the degree of consumer tariff misfit is correlated with socio-demographic, contract-, MCS-usage- and device-related subscriber characteristics. The present paper analyzes such associations. We develop two volume-based measures of the degree of tariff misfit in a sample of 1,274 subscribers of an MNO in Germany who had switched into a “grand flat rate” which includes unlimited national call minutes, mobile Internet traffic as well as national SMS. We find that the degree of tariff misfit is significantly higher among subscribers who are older, live in West Germany, have a longer MNO tenure, have larger monthly usage volume variations of voice calls, mobile Internet and SMS and are equipped with a device which is not an Apple iPhone. Implications of the results are discussed for MNO practitioners and for future scholarly work.