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Question: Annual CPI increase for contracts rectified with static discounts

whitling2k
Dabbler
Posts: 17
Thanks: 2
Registered: ‎02-04-2022

Question: Annual CPI increase for contracts rectified with static discounts

A billing enquiry has got me thinking...  My contract is for a specific amount, and for some reasons appears on my bill as a costlier product, rectified down with a static discount.  Is this a common thing?

 

I wonder if my discount will also increase annually by inflation+3.9%?  It should do - or it feels like a be a breach of contract because they will end up charging slightly more than the agreed 3.9%+inflation.

 

If the annual increase is applied as a 3.9%+inflation On the undiscounted rate, minus a static discount, the net increase to my bill will be marginally more than 3.9+inflation.  The value of my discount will decrease over time.

 

e.g:

If my contract is for £25.00

£25.00 + (let's assume 10% for simplicity) = £27.50 after March 2023

But if my £25.00 contract is supplied as a £27.50 product with a static discount of £2.50

£27.50 + (the same 10%) = £30.25.

And then subtract the £2.50 = £27.75 after March 2023

Which would be £0.25 per month more than my contractual rise based on my initial contracted price. This will compound into year 2 and beyond...  

... Unless my discount also increases by the same 3.9%+inflation each year.  In the example above the discount would rise to £2.75, giving the overall billable amount of £27.50

2 REPLIES 2
Gandalf
Community Gaffer
Community Gaffer
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Registered: ‎21-04-2017

Re: Question: Annual CPI increase for contracts rectified with static discounts

The easiest way to think about this is that we'd apply the price increase to what you pay us, including discounts.

So the discounts would be adjusted as well. If you pay £25 and the price increase is 10% then you'll pay £27.50 a month.

From 31st October 2022, I no longer have a regular presence here as I’ve moved on to a new role.
Anoush Mortazavi
Plusnet
Mr_Paul
Seasoned Pro
Posts: 617
Thanks: 215
Fixes: 12
Registered: ‎07-06-2022

Re: Question: Annual CPI increase for contracts rectified with static discounts

@whitling2k 

When I was with BT for broadband, I had a fixed £8 per month discount. When the inflation + 3.9% were applied earlier this year my payment increased by more than I was expecting - for the very reason that you described, they said my discount was fixed and not index linked to the price increase.

Hence, I moved to Plusnet!