Customer retention vs a one time sale

Companies are always in a bid to grow their market share. To achieve this goal, they resort into some of the following methods. Acquiring their competitors' market share, retaining their existing clients/customers, creating a new target group (expand the market share) which was not served by their product before etc. As a result, extensive research is done into promotion and pricing strategies as a means of meeting the goal. 

For illustration, I will use the telecommunications industry.

You walk into a store to buy a phone - say Samsung A14. The store has both locked and unlocked phones. The store attendant informs you that;

Option A:

Get the phone at full retail price $219 and pick a service provider of your choice. 

Let say you get a free simcard from service provider A and their monthly plan fee is $20.

Option B:

Get the phone for $54 of the total retail price of $219 saving $165 in the process. But this is only if get a locked phone under Service provider B whose monthly plan fee is $45.

This is a breakdown of the total cost assuming you stick to either option A or B for a period of 2 years before you can change both phone and provider.

Note: Amounts are in US dollars

From the breakdown above, by the end of the two years, Option B would have given service B almost twice the amount you could have spent on Option A in terms of revenue. 

Sometimes when the deal is too good, think twice unless you really are in a fix. Otherwise, take time and understand what works best for you and your money before committing (Especially if you can afford the full retail price).

Good reading!!

~NMN