For years I’ve been buying my phones on contract with whatever provider I’m with. For many years, that was AT&T. I got the first iPhone in 2007 on a two-year contract. I got the 8GB model, if memory serves me, and paid the subsidized price. Since then, I’ve always bought smartphones on subsidy, and just agreed to the contract. If I was fortunate, my provider would give me an “early” upgrade option… because the first problem with buying on contract for an early adopter like me is new phones are released every year. But providers make you sign two-year agreements. And if you sign a two-year agreement today on a Verizon iPhone, you’ll pay as little as $199 for the phone with the contract. However, if you want to go off contract, you’ll need to fork over $800 for a 16gb iPhone 5. At first glance, it seems like a high price to pay. But, I am finding it much more convenient to buy my phones off contract. Here’s why:
I have accepted the fact that I’m an “early adopter” tech geek. I don’t work for a company or an organization that will supply me test gadgets, so I’m on my own. I like to try new products out, and I like to have the latest, greatest. I lease my cars in the shortest contracts I can, cause I’m gonna want a new car as soon as I can get one. Bottom line. Same thing with gadgets. I’m tired of being locked into provider contracts and not being able to “upgrade” my way to the latest and greatest one. And if you consider the actual price you pay, it may be a better deal to go off contract. For example, a 16GB iPhone 5 is $199 with a two year agreement on Verizon. Verizon will charge you $30/per month to have the smartphone on your account. If you are on their “share everything” plan, your data cost is separate, based on what amount you’ll use. So at the bare minimum $30×24=$720, plus the $200 you pay up-front. That’s $120 more than the phone itself on the open market. Next year, when iPhone 6 inevitable comes out, you drop your iPhone 5 on Craigslist and get about half your money back to apply to the new, shinier one. That there is reason alone to go off contract and just buy the phone outright. Now, this works for me because I have a Verizon account with other devices. You may not get that same price if you don’t have other devices, or a “family plan”. But it’s a compelling argument to consider off contract.
The other reason I like doing this is it lets me explore other options. This weekend I picked up an HTC 8x Windows Phone to give it a try. I’m able to activate the SIM on my Verizon account and switch between the iPhone and the new HTC phone without having to add another line. I can bounce back and forth to give the new phone a real tryout or I can just keep multiple phones to move back and forth with. It’s easier to do this now that all my information is not tied to one device. With my contacts and apps in the cloud, I can move between multiple devices without a lot of hassle. Most people won’t do something like this, but I’m a gadget geek… so it makes sense to me. I see off contract as more freedom. It’s not for everyone. But, just like when you lease or buy a car, be sure you understand the impact of your subsidy in the fine print. You may find it more appropriate for you to free yourself from those two-year agreements.