2008-04-30

 

Over Belled

Seeing as I had nothing better to do last night, I calculated the taxes on my phone bill.

There are two taxes: a 5% Federal Goods and Services Tax (GST) and (in Ontario) 8% provincial sales tax (PST).

My bill was $50.07 before taxes.

My GST should have been $2.50 and my PST should have been $4.01. Instead it was $2.51 and $4.02 respectively. I was over billed $0.02!

Of course, that is really insignificant, however, this morning I discovered it is happening to others. Assuming Bell Canada bills 1,000,000 customers (probably low, considering the number of residential, business and cell phones available in Canada), that means an extra $10,000 per month for Bell or $120,000 per year.

Typical rounding practice is to round down if less than 1/2 a penny and round up if 1/2 a penny of more. And Bell appears to round this way, except it then adds a penny to the final result.

The numbers in bold should be the final result, but since Bell adds a penny, it is actually the numbers in italics.

$50.07 x 5% = $2.5035 => (rounded) => $2.50 + $0.01 = $2.51
$50.07 x 8% = $4.0056 => (rounded) => $4.01 + $0.01 = $4.02

Now I am going to have to go and check various other bills. sigh.

Image grabbed and cropped from here.

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Comments:
Don't sweat the small things!
 
This reminds me of Office Space and their rounding up accounting that proves very profitable!! Oh, big business.... greedy, greedy.
 
This is both surprising and unsurprising. Surprising because it's clearly (rather than subjectively) wrong.

But, it's also unsurprising because Bell has been using a strange business practice for some time, where they will add extra taxes and fees to your bill and happily remove or reduce some of them if you call and complain, but retain the fee/tax for those that don't bother. It creates a couple of classes of customers -- those that complain, who get a better deal and are happy for having "taken care of the situation"... and those that don't, who are presumably still happy yet also more profitable.

From a business point-of-view, it's sensible as long as they don't get found out, but it's definitely sneaky.
 
Also, Office Space stole that idea from Superman III... Gus Gorman (Richard Pryor) did it to enhance his paycheque as a computer programmer :)

But, Bell is actually adding cents on, whereas these other schemes were only trying to take the unused portion of a rounding decision (which, really, aren't all that unused because the round-downs are supposed to outweigh the round-ups).
 
Well I agree the point is 1 cent, penny whatever, of one customer another from someone else, and a few million build up. It is all about making money, it is business.
 
barbara: I'm not fuming. It is just something I noticed. However, this is one of those cases where a fairly small and insignificant overcharging, adds up to a little extra change for Bell.

breal: but it is not a question of rounding up. They are rounding correctly. What they are doing is adding an extra penny after rounding.

mattbg: whether this is a deliberate attempt at wringing out a few extra cents, or a programming error (adding a penny instead of a half penny), I don't know. Having worked on a number of programming projects, I know just how easily it is for something to slip through - especially if you have a lot of hands in the pie - people always assume someone else is going to catch the mistakes you don't.

carra: the question is whether this is a deliberate attempt to generate a little extra income (and it is very little compared to their gross revenues) or just the sort of foul-up you can expect from a large bureaucracy that probably outsourced the implementation.
 
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