| A question I actually get asked quite often is "why | | | | contract the service provider is willing to take a hit |
| are iPhones so much cheaper than other phones?" | | | | on the phone, because they know they will |
| I'm sure you may have noticed when you go in to | | | | eventually usually several months down the road turn |
| get an upgrade that the price of some phones, even | | | | a profit. Getting a new device is often the most |
| those with a fraction of the capability, are | | | | important part of the wireless experience to the |
| significantly more in cost than the iPhone. Not only | | | | average consumer so wireless carriers are willing to |
| would I like to take quick second to answer this | | | | do what it takes to help you get a new phone and |
| question but to also enlighten some people on how | | | | of course use that device to take advantage of new |
| an "upgrade" and phone pricing in general works. | | | | services, features, and subscriptions. Most people |
| Phone pricing at wireless carriers tends to baffle and | | | | would not be able to afford a smart phone if this |
| even frustrate some people that are likely in an | | | | wasn't the case. |
| already frustrating situation. Typically we are used to | | | | The reason you have to wait for eligibility to upgrade |
| paying the upgrade or new activation prices on cell | | | | is, because that carrier has already taken a hit on |
| phones. This involves the signing of a two year | | | | your first phone purchase and needs to be able to |
| contract to agree to stay with that particular carrier | | | | recoup their costs first, and of course profit. This is |
| or pay an early termination fee of around $150 dollars | | | | after all a billion dollar business with extremely high |
| (more or less). However when the time comes that | | | | overhead costs. I could go in to a lot more detail, but |
| we maybe need another phone sooner than | | | | that is the basic gist of things as far as pricing goes. |
| expected top reasons being dropped in a toilet, lost, | | | | Not a lot of other service providers do this in other |
| stolen, dropped and broken, or ran over by cars. | | | | industries, an example being if your cable company |
| (Yes, ran over by a car really is a top 5 reason - that | | | | sold HDTV's at a super low cost with activation of |
| even surprised me). When we find out that we are | | | | service or maybe premium channels. |
| not "eligible" for an upgrade we then get the sticker | | | | So why is the iPhone upgrade price so much less? |
| shock of having to pay a price typically in the | | | | Simply put the average cell phone is subsidized about |
| $200-$700 dollar range to replace out phone. This is | | | | $150 dollars off retail costs (manufacturer price). |
| likely far less than what we originally paid. So are cell | | | | However AT&T subsidizes the iPhone by $400 |
| phone companies trying to scam us into paying | | | | dollars. How come? The iPhone is a top seller and |
| more? The answer is absolutely not, and many | | | | iPhone users take advantage of far more features, |
| people do not grasp this concept. | | | | accessories, and tend to keep these services longer |
| When you get an "upgrade" you are signing a two | | | | than other phone users affording AT&T to |
| year contract and when that happens your phone is | | | | offer an amazingly low price for such a device. So |
| often "subsidized" in cost by the wireless carrier or | | | | take advantage of the deal and pick one up! |
| retailer. Phones are made by manufacturers such as | | | | The next time something happens to your cell phone |
| Motorola Apple, HTC, etc. They sell phones to retail | | | | be prepared with this knowledge in mind when |
| stores which in turn sell them for LESS than what | | | | looking at the costs of a new phone. |
| they paid. How can they do this? When you sign that | | | | |