Anyone else feel forced not to waste their subsidy, but are attached to their 5/5s?

easy-peasy

macrumors regular
Original poster
Jan 31, 2014
155
0
Basically my feelings are that I love my iPhone 5s and don't want to get rid of it (even for the iPhone 6)... yet, I feel like I'm throwing away a $450 subsidy if I don't use it to upgrade when it is available.

Then, I think that I'm so attached to my 5s that I'll just buy the 6 on launch day and sell it for $750+ on craigslist... but then I worry that I would regret not having the 6 down the line.

I'm just confused :(

:inserts FWP meme:
 

maflynn

Moderator
Staff member
May 3, 2009
64,030
30,566
Boston
Why commit to a two year contract, spending 200 (if not more for the larger storage models) for a phone if you have no need for such a phone?

I'd say its not a waste, but rather pretty smart.
 

Newtons Apple

Suspended
Mar 12, 2014
22,764
14,927
Jacksonville, Florida
Basically my feelings are that I love my iPhone 5s and don't want to get rid of it (even for the iPhone 6)... yet, I feel like I'm throwing away a $450 subsidy if I don't use it to upgrade when it is available.

Then, I think that I'm so attached to my 5s that I'll just buy the 6 on launch day and sell it for $750+ on craigslist... but then I worry that I would regret not having the 6 down the line.

I'm just confused :(

:inserts FWP meme:
You need to do what you want and not what the carrier is trying to make you do.
 

CEmajr

macrumors 601
Dec 18, 2012
4,374
1,134
Charlotte, NC
Yeah if you buy subsidized then it's foolish to not use it when available. Go with the option of buying the 6 and sell it for $700 on Craigslist like you said above if you want to keep your 5S.
 

T5BRICK

macrumors G3
Aug 3, 2006
8,088
2,057
Oregon
Get out of the subsidy pricing model and buy your phones outright. I did and now I plan on keeping my 5s for longer than I've kept previous iPhones. Who knows what my next phone may be!
 
Last edited:

barkomatic

macrumors 601
Aug 8, 2008
4,032
1,799
Manhattan
Basically my feelings are that I love my iPhone 5s and don't want to get rid of it (even for the iPhone 6)... yet, I feel like I'm throwing away a $450 subsidy if I don't use it to upgrade when it is available.

Then, I think that I'm so attached to my 5s that I'll just buy the 6 on launch day and sell it for $750+ on craigslist... but then I worry that I would regret not having the 6 down the line.

I'm just confused :(

:inserts FWP meme:
I'm sure when the iPhone 6 is released, along with all the hype that will accompany it, that you'll forget about this terrible problem. :p
 

mojolicious

macrumors 68000
Mar 18, 2014
1,563
310
Sarf London
$450 subsidy
if you buy subsidized
subsidy pricing model
I'm in the UK and this use of 'subsidy' genuinely confuses me.

Surely if you're paying a reduced upfront price for a phone, then the difference between the price you paid and the full retail price is more than recouped by the operator over the course of a contract?

For example, if you're getting a $400 'subsidy' on the initial price of the handset then your contract will cost you $20 a month more over two years, so you're ultimately paying $80 for 'financing'?

If the above is correct, 'subsidy' just seems such a strange choice of words.
 

Wide opeN

macrumors 65816
Aug 27, 2010
1,471
773
Georgia
Get out of the subsidy pricing model and buy your phones outright. I did and now I plan on keeping my 5s for longer than I've kept previous iPhones. Who knows what my next phone may be!
Ummm, and the benefits arrrrrre!?!?!?!

----------

I'm in the UK and this use of 'subsidy' genuinely confuses me.

Surely if you're paying a reduced upfront price for a phone, then the difference between the price you paid and the full retail price is more than recouped by the operator over the course of a contract?

For example, if you're getting a $400 'subsidy' on the initial price of the handset then your contract will cost you $20 a month more over two years, so you're ultimately paying $80 for 'financing'?

If the above is correct, 'subsidy' just seems such a strange choice of words.
Chances are it's a add on line that cost him $10.00 per month. Thus $240.00 every two years. You'd be crazy not to take the subsidy, because $650 > $240.00+$199.99.

Therefore it makes SENSE to keep using the subsidy until it can't be used anymore!!!
 

QCassidy352

macrumors G4
Mar 20, 2003
10,597
2,721
Bay Area
I'm in the UK and this use of 'subsidy' genuinely confuses me.

Surely if you're paying a reduced upfront price for a phone, then the difference between the price you paid and the full retail price is more than recouped by the operator over the course of a contract?

For example, if you're getting a $400 'subsidy' on the initial price of the handset then your contract will cost you $20 a month more over two years, so you're ultimately paying $80 for 'financing'?

If the above is correct, 'subsidy' just seems such a strange choice of words.
Yes. US carriers have long used the subsidy model in exactly the way you describe. It's not really good for consumers, but many like the cheap up-front price ($200 for a top end phone). The real killer is that the per-month cost does not come down when the subsidy is paid off OR when the contract expires. So users are put in exactly the situation described here - no real desire to upgrade, but doing so is the only way to get any value back because you'll pay the same high monthly rate either way.

Fortunately, US carriers are moving away from this model. My carrier (att) now charges $25 less per line if the phone did not receive a subsidy and also offers no-cost financing to spread the cost of a device out -- but the price does come back down when the device is paid off.
 

T5BRICK

macrumors G3
Aug 3, 2006
8,088
2,057
Oregon
Ummm, and the benefits arrrrrre!?!?!?!
Cheaper monthly bill, potentially less money out of pocket overall depending on how many lines you have and how your plan is currently setup.

----------

I'm in the UK and this use of 'subsidy' genuinely confuses me.

Surely if you're paying a reduced upfront price for a phone, then the difference between the price you paid and the full retail price is more than recouped by the operator over the course of a contract?

For example, if you're getting a $400 'subsidy' on the initial price of the handset then your contract will cost you $20 a month more over two years, so you're ultimately paying $80 for 'financing'?

If the above is correct, 'subsidy' just seems such a strange choice of words.
The problem with the model in the US is that extra amount built into the monthly bill(a bit less than $20 per month) does not go away after you've completed your 2 year contract.

If you choose not to upgrade your phone, you basically pay extra for nothing.
 

mojolicious

macrumors 68000
Mar 18, 2014
1,563
310
Sarf London
Chances are it's a add on line that cost him $10.00 per month. Thus $240.00 every two years. You'd be crazy not to take the subsidy, because $650 > $240.00+$199.99.
Ah, right. In you UK you can buy a £500 handset outright and then buy 'bundle x' at £15 a month it'll cost you £860 over two years. The same handset provided 'free' and same 'bundle x' would almost certainly cost you £1000 over a two year contract.

Who actually pays for the subsidies in the US? Obviously a network operator isn't paying retail price for the handset, but is it also the case that SIM-only costs are artificially inflated to offset the cost of subsidised handsets?

****

EDIT: ah, further posts. I'm struggling to get my head around this. The 'after two years you're FREE' (to either greatly reduce your costs, or give the old phone to a random relative and enter into a new two year contract with the latest/greatest handset) model is very ingrained here. Under the US model, at what point does the phone actually belong to you?
 

aristobrat

macrumors G5
Oct 14, 2005
12,248
1,319
EDIT: ah, further posts. I'm struggling to get my head around this. The 'after two years you're FREE' (to either greatly reduce your costs, or give the old phone to a random relative and enter into a new two year contract with the latest/greatest handset) model is very ingrained here. Under the US model, at what point does the phone actually belong to you?
After two years on the US subsidized model, your contract is over, and the phone is yours. You can then cancel your service and not incur any "early termination fee". Also at that point, most carriers will unlock your phone. However, the price of your monthly bill does not reduce, even though you've paid the phone off.

T-Mobile started something last year, which AT&T and Verizon are matching, where they are offering plans where the cost of the phone is separate from the cost of the service. These plans are relatively new, and based on posts on MacRumors, there's still a lot of confusion about how they work. But with these plans, until you have paid back the MSRP of the phone, your monthly bill includes an amount for the financed phone (0% APR), plus an amount for the service. Once your phone is paid off, then your monthly bill is only for the service.

In the US, SIM-only costs are the same as the MSRP. i.e. US$649 for the 16gb iPhone.
 

T5BRICK

macrumors G3
Aug 3, 2006
8,088
2,057
Oregon
Ah, right. In you UK you can buy a £500 handset outright and then buy 'bundle x' at £15 a month it'll cost you £860 over two years. The same handset provided 'free' and same 'bundle x' would almost certainly cost you £1000 over a two year contract.

Who actually pays for the subsidies in the US? Obviously a network operator isn't paying retail price for the handset, but is it also the case that SIM-only costs are artificially inflated to offset the cost of subsidised handsets?
The model is almost exactly the same, except in the US the monthly phone cost or "Subsidy" is built right into the cost of the wireless service.

The carrier covers this cost, because for most situations it actually makes them money. A lot of people simply keep using their old phones and keep paying the same monthly wireless service cost, even after their 2 year contract is expired.

EDIT: ah, further posts. I'm struggling to get my head around this. The 'after two years you're FREE' (to either greatly reduce your costs, or give the old phone to a random relative and enter into a new two year contract with the latest/greatest handset) model is very ingrained here. Under the US model, at what point does the phone actually belong to you?
As soon as your 2 year contract is up the phone belongs to you.
 

KUguardgrl13

macrumors 68020
May 16, 2013
2,485
109
Kansas, USA
My contract for my iPhone 5 is over in January 2015 when there will likely be an iPhone 6, but my family (outside of me) is one of many that doesn't get how the contracts and subsidies work. My mom still has an LG Env3 that she's had for probably four or five years now. She doesn't want a smartphone and doesn't get that my dad (the plan "owner") thrown WAY more money at that phone than it's worth. This is why I'm glad my BlackBerry Storm2 died just after my contract was up so my parents didn't keep paying for such a junky phone.

So when January comes I may just have to save up and get my dad's permission to upgrade. If my 5 still works, I'll sell it or see of anyone in my family wants it.
 

rui no onna

macrumors 604
Oct 25, 2013
6,846
3,113
Chances are it's a add on line that cost him $10.00 per month. Thus $240.00 every two years. You'd be crazy not to take the subsidy, because $650 > $240.00+$199.99.

Therefore it makes SENSE to keep using the subsidy until it can't be used anymore!!!
Assuming he actually keeps an iPhone on that line, you're forgetting the enforced data plan so that's more like $25-40 per line, not just $10. That said, since the extra $450/2 years is built-in to the plan pricing, for me, it was a waste not to use our upgrades so I ended up upgrading whether or not I wanted the new iPhone so as not to waste the subsidy. I just switched our account to the new Mobile Share Value 10GB plan so this year, it's easy for me to skip the upgrade if there are no compelling features. :rolleyes:

Mind, T-Mobile actually had BYOD Value plans prior to removing traditional phone subsidy altogether and introducing an installment plan. If I remember correctly, the cost for 4 lines with shared 1,000 minutes, unlimited text and unlimited data (2GB 4G speed) on each line is just $110.
 

kmj2318

macrumors 68000
Aug 22, 2007
1,602
544
Naples, FL
If you're on a contract, you're paying for they upgrade so you might as well take it, although iPhone users probably want to hold out for the 6. Maybe this is a good time to get a no-contract plan.
 

Dontazemebro

macrumors 68020
Jul 23, 2010
2,173
0
I dunno, somewhere in West Texas
I'm in the UK and this use of 'subsidy' genuinely confuses me.

Surely if you're paying a reduced upfront price for a phone, then the difference between the price you paid and the full retail price is more than recouped by the operator over the course of a contract?

For example, if you're getting a $400 'subsidy' on the initial price of the handset then your contract will cost you $20 a month more over two years, so you're ultimately paying $80 for 'financing'?

If the above is correct, 'subsidy' just seems such a strange choice of words.
It's an American thing. People are so used to purchasing via credit/payment plans over here that they only really look at the upfront cost and not what it'll take to pay off the entire cost. Save now wing it later, is the Gold standard for quite a few.