Generally you need to pay for the phone separately and right away.
I assumed that since this is a brand new phone. This phone is my for girlfriend and she is eligible for some discounts.
I just went to Verizon website to see how much she would have to pay if she wanted to upgrade to Droid Motorola.
This is what the website says:
Full Retail Price: $559.99
Price with 2year Contract: $299.99
Online Discount: -$100.00
New Every two discount: -$100.00
Your Price: $99.99
She only would have to pay $99.99 for this phone.
If Incredible is $199.99 with 2year contract (which I doubt that this phone will be less than Droid Motorola), then she won't have to pay anything for the phone, if above info is the same for Incredible.