If you signed up for SunRocket's $199 pre-payment deal for a year of VoIP phone service, well, I hope you aren't expecting any important calls. Without notifying customers, SunRocket shut down their business including phone service for customers.

This is a good example of why you should avoid pre-paying for anything. Pre-paying usually saves only a little bit of money while taking away your leverage and exposing you to risk of either quality of service changes or them going out of business.

If you think about it, most businesses pushing pre-payment and long-term contracts (almost as bad) are the businesses you probably have the most trouble with. Gyms and cell phone companies come to mind and I'm having trouble with both right now, actually. Even those annoying door-to-door guys selling coupon books for twenty oil changes fit this model. You might have saved some money by that twentieth oil change or two years into a gym membership, but is it worth being locked in for so long? More importantly, does the business have any incentive to keep a customer who pre-paid happy? It's in their interest for you to not even use the service you pre-paid for.

Posted by JoshC at July 17, 2007 6:18 PM

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