Friday, September 13, 2013

Why iPhones may be cheaper than you think

People in the USA might not have noticed it, but iPhones are expensive devices. Though you might hear the iPhone can be had for free or $99 that's with a 2 year contract, and other countries have a very different idea of prices under contract. For instance, here in Portugal you might end up paying nearly 300€ even with an expensive 2 year contract.

For me it's easy to sort things out: you just add up it all up and figure out how much it will actually cost you at the end of the contract; and compare to what you'd spend if you bought it upfront and chose your own plan. Most of the time (in here), it's cheaper to opt for the non-contract approach, even though that will cause you to face a very scary 799€ (about $1063 USD!) for an iPhone 5S with 32GB upfront!

Yes, it's a lot, but at least then you can subscribe a 15€ monthly plan that has enough voice and data for your actual usage. Let's compare it, in round numbers:

  • 800€ (unlocked iPhone 5S 32GB) + 24x 15€ (monthly plan) = 1160€
  • 300€ (contract iPhone 5S 32GB) + 24x 70€ = 2480€

Sure, the more expensive plan has unlimited voice and more internet data... but if you can do with (in my case) 100 minutes of voice call and 1GB of data... is it really worth to pay over twice as much in the end?

But there's one extra tidbit you have to consider and that make that horribly expensive price tag become a lot more "relative".

You see... if/when you try to sell your used iPhone, you'll get a much better deal than you'd have if you had any other brand. I can say it for sure because when I tried to sell my iPhone 4, I had to endure a deluge of contacts because I put up a price that I though was "fair"... but it was actually a lot lower than it's actual value in the second-hand market (I immediately revised it, of course, and it was "gone" in less than a day).

So, if you're off contract, you're free to upgrade/replace/change whenever you want. If you replace your iPhone yearly, then you won't be paying the full amount but just the difference between how much you get for your old iPhone and how much the new one will cost you.

Some put the iPhone 5 trade-in value at 50%, but in the second hand market its value is much higher (about 75%). That means a 25% loss... which isn't that bad a deal for anyone looking to have a brand new iPhone. Or, seen in another way, a brand new iPhone 5S may not cost you 800€ after all... but only 200€.

After convincing myself this was the first year I would not be getting the new iPhone... I'm now forced to reconsider my position. (Though I'm still angry at Apple for not giving us a fully black iPhone 5S.)

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