Archive for December, 2013

How to get a new iPhone every year

I don’t understand why there is so much confusion in terms of phones and subsidies.  Basic math reveals how to get new iPhone every year for minimal cost and without being locked into a contract.

The key is to buy the iPhone and not rely on a subsidy.  Let’s take a look at the cost comparison.

First there is the cost of the phone.  Let’s use the iPhone 5S (16GB) as an example.

  • iPhone 5S from Apple: $650
  • Subsidized iPhone from AT&T: $200

Second, there is the cost of service.  For purposes of comparison, let’s select common features: unlimited talk, unlimited text, and 2.0 to 2.5GB of data per month.

  • No-contract plan (TMobile with 2.5GB data): $60/mo or $720/yr or $1440/2yrs
  • 2 year contract (AT&T mobile/share plan with 2.0 GB data): $95/mo or $1140/yr or $2280/2yrs

Let’s examine the total costs over one year with each option:

  • No contract plan: $650 (phone) + $720 (service) = $1370
  • 2 year contract: $200 (phone) + $1140 (service) = $1340

And the total costs over 2 years are:

  • No contract plan: $650 (phone) + $1440 (service) = $2090
  • 2 year contract: $200 (phone) + $2280 (service) = $2480

These numbers reveal that the break even point for buying a phone is roughly a year.  During the second year one pays the phone company about $400/yr or $35/mo for the convenience of subsidizing the phone.

There are numerous non-financial advantages with purchasing the phone and going no-contract.

  • One can switch carriers on a whim.  If service is poor in your area you can easily switch.
  • If you leave the country for a while, you can terminate service while you are gone.
  •  One can upgrade their phone every year. If you are a gadget hound, you may find this appealing.
  • Some smartphones retain value. This can be a significant financial advantage when selling your old phone.  You can apply your proceeds from your old phone to a new phone.

Note that there other factors to consider.  Some of the data sharing plans can offer pricing advantages if you have multiple devices.  Shop around to compare these plans.  Also, the numbers will differ based one the number of phones and plans one purchases – with family plans, for example.

The T-Mobile plans typically include tethering, which is a nice feature.  If tethering is important to you then take that into account when comparing plans.

I recently switched from AT&T to T-Mobile after purchasing an iPhone.  I found the process of not having to read over a lengthy contract to be refreshing.

 

UPDATE: 

Here are the current (12/11/2013) rates AT&T prepaid plans.

attplans

 

Here are the current (12/11/2013) rates for Verizon prepaid plans.

verizonplans

Here are current (12/11/2013) rates for Sprint prepaid plans.

sprintplans

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December 11, 2013 at 2:21 pm 3 comments


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