Paying for my phone full price??

[MARLIQQ]

So I am contemplating a phone purchase, my eyes are glazing over looking at phone plans, and comparing plans like AT&T Next, Verizon Edge, and T-Mobile Jump. With the phone subsidies....paying for my phone twice...ehhh--No. But then I got to thinking, the only reason I even attempted to familiarize myself with the plans, was because I want the upgrade flexibility....So why not pay full price for phone?? Maximum FLEXIBILITY! Yes! Now we are talking! But wait cog wheels spinning...Is paying full price for my phone even worth it for me? Here's my point:

I walk into AT&T and pay $299 for a phone on a two year contract. I get my first bill, its prorated with activation fee, the bill is a pain. 12 months later--which is usually the time frame for the updated version of your phone to release--I terminate my service. ETF for AT&T is $325, but after 12 months your etf fee will be around $200. So in total after my year of service I only paid $499--I head to get the newest and latest phone, and sell my old one and do it all over again? Sounds good to me...

or

I purchase my phone from Google for $700+ go into AT&T get it activated.
I get my first bill, its prorated with activation fee, the bill is a pain. I can sell my phone tomorrow if it occurred to me (probably not going to do that, because I make educated purchases) or in the next 6 months--still chances are the next big thing (samsung pun intended) probably hasn't arrived yet. But if it has, I spend another $700 and sell my phone. Can stick with current carrier or go elsewhere.

Now I know people are going to say this is stupid because unlocked phones rock, because this is a forum for those types of people, but what if you don't require an unlocked phone? What if you have no carrier loyalty? What if I am not so fickle as to need a new phone every 6 months or even every year? What if I don't scream every time my carrier holds updates? Is it not true that most cellphone consumers would not actually benefit from buying a phone full price if you generally tend to be a pretty loyal customer to your carriers for at least a year? What do you guys think?

 

[bjacks12]

Paying full price for the phone only makes sense if you are on a prepaid plan IMO. Post-paid plans include the cost of the phone in the service, which is why they cost so much more. So if you spend $700 for a phone and get onto an AT&T postpaid plan, you're still paying for a subsidized phone on top of it. The carriers dont' drop their rates for BYOP.

I had an excel sheet I made with my breakdown of costs for buying a phone and getting on a prepaid plan. I'll have to dig it up.

 

[John Bean]

Since the OP is in the US I can't comment from experience, but as a general point I'm inclined to agree that it makes less sense to pay full price for a phone then lock yourself into an expensive contract with a carrier.

That said, here in the UK all the carriers have a sliding scale of contract costs depending on the phone you choose, all the way down to "SIM only" contracts that include no phone at all. It's not at all clear-cut here that PAYG (prepaid) is always the best option for a phone bought outright, although that is my preferred choice.

I realise this doesn't help the OP directly but it is may help others outside the US who have similar choices to make.

 

[bjacks12]

Here's a quick spreadsheet I just made comparing costs with the M8(since OP mentioned $700 phone from Google).

In the full-price section, the phone was either purchased from Google or from the carrier, depending on the ease of price location. Verizon and AT&T have terrible websites right now. T-Mo showed the full price listing of $585 for the device.


https://docs.google.com/spreadsheets/d/1ZvlW2i4SbsgZBalTNKFQC2p4szg1Mj_OZJ5YOcOxkVc/edit?usp=sharing

 

[breadnatty08]

Merged your posts, bjacks12.

OP, the only reason we found to pay full retail being on a post paid plan with Verizon was to save our grandfathered unlimited data. If your plan is fine for you and you don't mind being locked in for 2 years, take the subsidy. Otherwise, you're just blowing the money away.
Trust me, as someone who's always paid the subsidized price for a phone, I had to throw down $650 for my G2 and it is a tough cost to swallow.

 

[Hadron]

Since the OP is in the US I can't comment from experience, but as a general point I'm inclined to agree that it makes less sense to pay full price for a phone then lock yourself into an expensive contract with a carrier.

I'd agree, but as noted here you can take a SIM-only contract which is much cheaper than one that includes a phone subsidy, and over the 2 years of a typical contract works out cheaper even when you include the cost of an unsubsidised phone. Provided, that is, that you can afford to pay upfront for the phone.

But my impression is that in the US most big providers have the nerve to charge the same for a contract even if you bring your own device! And that particular example of unjustifiable greed makes a difference to the decision: here there is an economic advantage as well as increased flexibility, but there it may not be the case.

 

[jhawkkw]

Alright, so there's a couple of things that need to be cleared up and hopefully this will help put things into perspective:

1) AT&T Next, Verizon Edge, and T-Mobile jump aren't subsidies, they are no interested loans from the carrier to help you pay the full retail price of a phone over the course of roughly two years. When using these options, they add the monthly payment on top of the plan's cost each month. You mentioned AT&T so I'll break down the 3 different possible scenarios with getting a new phone (64Gb iPhone 6 as the example phone, 10GB plan and 2GB plan).

A) 2-year contract, 1 line with 10GB of data.
$100 for the data + $40 access charge for the line per month= $140 dollars per month prior to taxes and fees. Let's say you spend $300 on the phone for the subsidy, this would make 300 + (140*24) = $3660 for that phone over the life of the contract.

B) AT&T Next payments.
$100 for the data + $15 for the access charge per month + $31.25 per month for the phone. This would be (24 * 146.25) = $3510

C) AT&T Full Retail.
$100 for the data + $15 for the access charge + $749.99 for the phone up front.
This would be 749.99 + (24*115) = 3509.99


A) 2-year contract, 1 line with 2GB of data.
$70 for the data + $40 access charge for the line per month= $110 dollars per month prior to taxes and fees. Let's say you spend $299.99 on the phone for the subsidy, this would make 299.99 + (110*24) = $2939.99 for that phone over the life of the contract.

B) AT&T Next payments.
$70 for the data + $25 for the access charge per month + $31.25 per month for the phone. This would be (24 * 126.25) = $3030

C) AT&T Full Retail.
$70 for the data + $25 for the access charge + $749.99 for the phone up front.
This would be 749.99 + (24*95) = $3029.99

We see for the 10GB plan, AT&T Next wins, but for the 2GB plan the contract wins. Now lets thrown a huge wrench in the 2GB plan, their prepaid plan. Since you have to BYOP, there's only one option.

$60 for 2GB of data + $749.99 for the device. 60*24 + 749.99 = $2189.99


Look at the huge difference between postpaid and prepaid costs for the 2GB plan. Not to mention taxes and fees on service are ALWAYS cheaper using prepaid vs postpaid.

Spoiler

Now I'll thrown the numbers into incredible whack by including my personal numbers on T-Mobile:

$350 for Nexus 5, $30 prepaid plan for 100 minutes, unlimited texting, and 5GB of data.

30*24 + 350 = $1070 over 2 years.

 

[bjacks12]

I save enough on prepaid that I could buy myself a new nexus every year and still be cheaper than any postpaid plan with a subsidized phone.

 

[MARLIQQ]

I totally agree with all of you, except my point has been kind of masked, because I didn't quite spell it out. Yes, over a two year period, buying your phone full price would be beneficial, but if we are talking about simply one year. Cancelling your service voluntarily after just one year and choosing to pay an ETF, so you can sell your phone and go with a new carrier simply for upgrade purposes. Now if you have a grandfathered plan, no this would not work, but it certainly appears to be a cheaper option for someone like me who has great coverage from most carriers. Especially with how quick and easy they get you set up in store with a new phone and account, I see no hassle to save a few hundred bucks...

 

[zuben el genub]

TMo had a value plan that was less if you brought your own device. I have it, but it's now grandfathered. Prepaid doesn't have very much in the way of family plans.

I buy my own phones. I don't like carrier bloat and TMo can't complain about rooting unlocked phone. I usually want a phone that TMO doesn't have anyway. I go by spec and not features.

You can find pretty good buys on barely used phones.

 

[lunatic59]

Alright, so there's a couple of things that need to be cleared up and hopefully this will help put things into perspective:

[snipped]

Look at the huge difference between postpaid and prepaid costs for the 2GB plan. Not to mention taxes and fees on service are ALWAYS cheaper using prepaid vs postpaid.

Don't forget that with the AT&T Next option there are discounts for using a shared data plan. $25 for 10 GB and $15 for lower plans, which essentially takes the subsidy cost out and saves NEXT participants $600 (or $360) over the 24 months used in your example.

Figuring out carrier contracts is as easy as solving a Rubik's cube in the dark ... with your feet.

...but if we are talking about simply one year. Cancelling your service voluntarily after just one year and choosing to pay an ETF, so you can sell your phone and go with a new carrier simply for upgrade purposes. Now if you have a grandfathered plan, no this would not work, but it certainly appears to be a cheaper option for someone like me who has great coverage from most carriers. Especially with how quick and easy they get you set up in store with a new phone and account, I see no hassle to save a few hundred bucks...

It would really depend on both what the ETF was and how much you could sell your phone for. Frankly phones don't hold much value after their first year. iPhone fare better than most, but even there I doubt you'd break even. Don't forget, those ETF's are prorated to compensate the carrier for the profit they'd make on the fees + the remaining phone subsidy. I'd be interested in some actual numbers and would be surprised if you were actually able to save more than $50. :dontknow:

 

[MARLIQQ]

With AT&T and Verizon they both have a monthly decreasing ETF. Verizon starts at $350 and AT&T starts at $325 (for smartphones), they decrease monthly by $10. After a year that would be about $120.
Even without selling the phone, I think you would come out better after simply paying the postpaid price the year before. A lot less than $700 for a high end phone.

 

[exninja]

I save enough on prepaid that I could buy myself a new nexus every year and still be cheaper than any postpaid plan with a subsidized phone.

This. If you can get 5 friends on TMo, you'd be paying ~$25/mo for 1 gb (add $10/mo for more). You'd save way more than the $200 you're saving by making and breaking contracts for the $700 phones ($700 vs $299+$200ETF = $200 savings on contracts). Just do JHawkkw's calculations over again but change the 24's to 12's, and ADD the ETF's. The prepaid TMo at the bottom will still beat the pants off any other contract option, guaranteed.

 

[Stuntman]

My current phone was purchased locked due to unforseen bad timing. I needed a phone quickly and purchasing one from my carrier was the best and most convenient option at the time. I had other things to worry about and did not have an opportunity to properly research phones.

I had an old unlocked phone which ended up saving me money. If you travel internationally, I found that roaming charges of my carrier is very expensive. A 90-minute drive across the border to the US cost me $40 because I was using Google Maps on roaming. I used like 7MB of data. This past weekend, I was able to just subscribe to another service that costs me $4 per day with unlimited texting, calling back to Canada and 600MB of data. I just bought a SIM card and popped it in. SIM was $20, but I do plan on crossing the border for several more days in the next year. My carrier does not have any roaming plan that comes close to what I can get with another carrier's service.