If there is one thing that the big boys convince people of, it is that the discount on handsets for signing that 2 year commitment is worth it. What goes unspoken is how much cushion that the carriers add to that device to make those discounts a reality. Let’s take a quick look at a few examples here and see what those deals really add up to…
The Nexus 4 from Google was released yesterday to much fanfare and a quick sell out. The 16GB model sold directly from the Google Play Store for $349. Today the same phone launched on T-Mobile for a retail price for $499, but a lower $199 on contract. That 2 year deal saves a person less than $10 a month on that particular handset, but lets not talk about the $150 markup over what Google was selling it for yesterday.
The Nokia Lumia 710 is available on T-Mobile for Free with a 2 year agreement, or $249 in their prepaid Monthly4G program. They also have a featured ‘refurbished’ model for a lower $179.99 as well. This “free” device is marked down from a discounted $329.99 retail when the same phone in a different box will only set you back $249.99. Where did the extra $80 markup come from?
Finally, we look at the current King of the Smartphones, the Galaxy S III from Samsung. This device is also available on T-Mobile contract for $199.99 (or often for FREE during their big Samsung Sales) and features a $579.99 retail price. Yet, the Monthly4G package has a $549.99 price tag and includes a $50 calling credit. This works out to a $499 price tag for the same phone.
It might take a while for some to figure out that non-contract phones don’t have to cost much more than their contract counterparts. If you look at the price difference between the $249.99 of the GS3 on contract vs. the $549.99 price off contract, the difference is a lowly $12.50 per month over 24 months. That means your Solavei bill would be “$62” a month instead of the $110 you would pay T-Mobile for the same service.
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