Keeping your old iPhone costs you $225 a year

With the new iPhones out and my contract up, I’ve been trying to decide if upgrade my 4S is worth it. It’s working fine and apart from the battery life sucking, it seems no different from the day I got it.

iPhone 5s

Once I did the math, I decided it would be financially foolish not to upgrade immediately.

Consider that an unlocked, contract-free 16GB iPhone 5s costs $649. Buying it with a 2-year contract costs you $200. So that’s a difference of $450 or $225/year. Where does that $225/year come from? You’re making monthly payments on it as part of your mobile bill. The math follows on the 32GB and 64GB versions too, with $225 covering the $200/$300/$400 difference from the off-contract price.

So if you do nothing, you’re paying to subsidize a phone you already own.  Your wireless carrier is just milking you.

Now if you upgrade your phone and pay $200, you’re still making $225-$200 = $25 in year one! The math gets better if you sell your old phone. My 2-year old 32GB 4S fetches $155 for trade-in on Gazelle. So now I’m “making” $180.

Now of course this assumes $649 is a fair price for an iPhone, despite that it costs only about $200 to make one. If you were take off typical 50% retail markup, then you’re about even over 2 years. Unless of course you buy the gold iPhone which is worth more because, you know, it’s goooollld.

3 Comments

  1. It’s really the same for any phone regardless of the carrier. That’s why when I am out of contract next year I am seriously going to look into getting a phone with no contract from some place like Walmart. Hopefully by then offerings will have evolved even more.

  2. I recently unloaded my iPhone 4 and found my best bet (since I wasn’t willing to deal with eBay drama) was Apple’s new recycling plan. Check it out; I got $151 for a 4 so your 4s is presumably more. You can only get Apple credit, but if your starting premise is buying another iPhone anyway that wouldn’t seem prohibitive.

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