Question

Why might your cell phone carrier give you a discount on a new cell phone but not simply lower your price if you decide to forgo the new cell phone (no, they do not get a kickback from the cell phone companies)?

Answer 1

Cell phone carriers will give discounts to the new cell phones purchased, because it will make the owner of the new cell phone to have the services of the same cell phone carrier. It means that offering the discount today, will help the carrier to increase the business and develop a future cash inflows from the customer on that new cell phone. Hence, a win-win situation is created. A customer with a new phone, gets discount and cell phone carrier gets business.

Though, the above offer is null and void when new cell phone is forgone, because it is also the loss of business for the cell phone carrier.