Free Appliance Power Deals: The True Costs

A couple of years ago, a member of team Canstar signed up for a long-term power plan and broadband bundle to snag a “free” appliance. At the time, they were excited about their new washing machine. But they soon became disillusioned as they saw cheaper broadband and power deals come to market. And by the end of their contract they were itching to swap provider to chase considerable savings on their utility bills.

So how much do the free appliances or tech that come with some long-term contracts really cost? Canstar Blue crunches some numbers:

Free Appliance Power Deals: The True Costs

For this article, we’re not going to call out any providers by name, but all the figures used are real. The plans we were quoted on were for:

• Standard electricity user in Auckland using 805kWh per month at a flat rate (non-controlled meter)
• Standard 300/100Mbps endless-data fibre plan

POWER & INTERNET BUNDLE + FREEBIE

Details: 24-month contract offering either a “free” appliance

This bundle deal is similar to the one that our Canstar team member signed up for. In return for locking into a long-term deal, they received a free washing machine. So for our example, how do the costs work out over a two-year deal:

Cost of Power: $6142.13 + Cost of Internet: $2438.95 (includes $14.95 modem delivery fee)

Total Cost of Power + Internet: $8581 over 24 months ($357.54 p/m)

Now this deal comes with a choice from a range of Samsung appliances, so we went online to discover the best deals we could find on the same (or comparable) items:

• Stick vacuum: $1149
• 280l fridge-freezer: $1049
• 8kg washing machine: $969
• 43-inch TV: $890
• Soundbar: $836
• Galaxy A54 5G 128GB: $644

So even if you plump for the most expensive item on the list, the stick vacuum, the total cost of your package for power and internet is going to cost you:

Total Cost of 2-year Appliance Deal

Power + Internet ($8581) – Freebee ($1149) = $7432 over 24 months ($309.67 p/m)

Now let’s compare that price with separate standard power and internet connections. Note that for the electricity plans we chose two similar no-contract plans. However, for the broadband we opted for a no-frills provider that gives a discount for signing up to a 12-month contract. We chose this option as most broadband providers offer big discounts for 12-month plans, including free installation, modems, etc.

NO-FRILLS BROADBAND

Details: 12-month contract for unlimited 300/100Mbps fibre

Cost of broadband: $75 per month + $10 modem delivery fee – 1 month free offer

Total Cost of Internet: $1735 ($72.29 p/m)

CONTRACT-FREE POWER

The two electricity quotes we received were from two smaller independent retailers. And, as you can see, there’s about a $6 difference per month in the quotes:

Power Plan 1: $5443.617 over 24 months ($226.82 p/m)

Power Plan 2: $5,295.52 over 24 months ($220.65 p/m)

Add to the power plans the cost of the no-frills broadband:

Power Plan 1 ($5443.62) + Broadband ($1735) = $7178.62 over 24 months ($299.11 p/m)

Power Plan 1 ($5295.52) + Broadband ($1735) = $7030.52 over 24 months ($292.94 p/m)

Free Appliance Power Deals: The True Costs

So how much does that free appliance really cost?

• Appliance Deal Less Cost of Free Appliance = $7432 over 24 months ($309.67 p/m)
• No Frills Power 1 + Broadband = $7178.62 over 24 months ($299.11 p/m)
• No Frills Power 2 + Broadband = $7030.52 over 24 months ($292.94 p/m)

If you choose the least expensive of our two power deals plus the no-frills broadband plan, the total cost over 24 months is $7030.52.

Compare this to the total cost of the electricity and broadband bundle deal, minus the most expensive freebie: $7432.

And your free appliance will still cost you an extra: $401 over the contract term!

And this figure is based on the most expensive appliance, too, the vacuum. Choose cheaper gifts and the freebie will cost even more. Extra cost of appliance deals vs cheapest no-frills deals:

• Stick vacuum: $401
• 280L fridge-freezer: $501
• 8kg washing machine: $581
• 43-inch TV: $660
• Soundbar: $714
• Galaxy A54 5G 128GB: $906

All up, these figures are quite remarkable, for even if you subtract the retail price of the goods on offer (and you can be sure the retailer won’t be paying retail for the appliances it’s giving away) you’re still paying a hell of a lot more than if you shop around for the best deals in the market.

Yes, you have the reassurance that your power and broadband prices are fixed for two years. But that really is of little concern. Over the past two years the average cost of unlimited 300/100Mbps fibre has fallen, despite inflation. And the real price of electricity has dropped, too.

So while the savings will be different for individual households, it’s 100% true to say that appliances or tech that are touted as free do come with added costs. Signing up to a long-term deal in return for a freebie will cost you more than shopping around for the best deals in the market.

In addition, we could have made further savings on the above separate power and broadband deals had we:

• Bundled mobile phones with the internet for extra $10 monthly discounts
• Chosen a power plan offering cheaper off-peak electricity

Free Appliance Power Deals: Compare Power Companies

If you’ve reached the end of this story, it’s clear that you’re interested in finding a better power deal. And a great way to start is by checking out Canstar’s latest Star Ratings awards. Based on the satisfaction ratings of real-life Kiwi electricity consumers, they rate NZ power companies for customer satisfaction and value for money. See the table below for some of the results, or click on the button below for the full results of our survey.

Canstar Blue’s latest review of NZ power companies compares them on customer satisfaction. The table below is an abridged version of our full results, available here.

Compare Power Companies

About the author of this page

This report was written by Canstar’s Editor, Bruce Pitchers. Bruce has three decades’ experience as a journalist and has worked for major media companies in the UK and Australasia, including ACP, Bauer Media Group, Fairfax, Pacific Magazines, News Corp and TVNZ. Prior to Canstar, he worked as a freelancer, including for The Australian Financial Review, the NZ Financial Markets Authority, and for real estate companies on both sides of the Tasman.