AT&T Raises Subsidized iPhone 3GS Price to $0.99

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Apr 12, 2001
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In a curious move, AT&T has raised the subsidized price of its cheapest iPhone to $0.99, up from free.

When the iPhone 4S was announced in October, Apple specifically mentioned in its press release that the iPhone 4 and iPhone 3GS would be available in 8GB capacities for subsidized pricing of US$99 and for free, respectively.

During AT&T's Q3 2011 earnings call with analysts on October 20th, AT&T Mobility CEO Ralph de la Vega twice mentioned the iPhone 3GS's $0 price point, saying during the introductory remarks:
Our lower price plan continues to be a good entry point for many subscribers and now that we offer a free iPhone with a 2-year contract for the first time ever, the iPhone 3GS, we expect to broaden the smartphone base even more.
De la Vega again mentions the 3GS during question-and-answer portion:
I also mentioned in my notes that we have another device that I think is going to dramatically change those people that are on smartphones and quick messaging devices, the 3GS, which is free with a 2-year contract. We've seen a tremendous, tremendous demand for that device even though it's a generation old. And actually, we're getting more new subscribers coming on the 3GS on the average than other devices.



It is unclear why AT&T has elected to raise the price of the iPhone 3GS by a negligible but still notable amount a month and a half after it became free on contract, particularly given the fact that both Apple PR and AT&T Mobility's CEO had specifically touted the free nature of the device. In response to a request for comment on the price increase, AT&T declined to offer a specific reason:
iPhone 3GS is still available at an incredibly low price and we're confident consumers will agree that this remains one of the best deals for a leading smartphone.
For its part, Apple continues to offer the iPhone 3GS, subsidized on AT&T's network, for $0.00 on the Apple Online Store.

Update: MacRumors forum user Metcury46l had one possible explanation for the price change: I work at AT&T, this is being done to help prevent fraud as the 99 cents cannot be billed to your bill. It must be charged to a credit or bank issued debt card. Fraudsters are using stolen identities to steal these handsets ... been an issue since they went free.

(Image courtesy Flickr/MrVJTod)

Article Link: AT&T Raises Subsidized iPhone 3GS Price to $0.99
 

r2shyyou

macrumors 68000
Oct 3, 2010
1,757
4
Paris, France
:confused:

Isn't is it good for marketing purposes to be able to make the "free" claim? I won't pretend to be a marketing genius or anything but that seems like an odd move.
 

HarryKeogh

macrumors 6502a
Jun 25, 2008
594
747
I'm guessing this was just done to avoid some conflict in their software or just make some accounting cleaner.
 

tod

macrumors regular
Oct 3, 2009
158
92
Ohio
It has to be a marketing thing. Maybe 99 cents attracts more attention than free.
 

dfnj123

macrumors 6502a
Jun 29, 2007
538
71
New York, New York
Still free at Apple Stores, Radioshacks, Best Buys, Targets, Wallmarts, etc...

AT&T corporate stores are going to be the only people to lose anything because of this...
 

TimUSCA

macrumors 6502a
Mar 17, 2006
696
1,537
Aiken, SC
:confused:

Isn't is it good for marketing purposes to be able to make the "free" claim? I won't pretend to be a marketing genius or anything but that seems like an odd move.
As someone who is in marketing, I'll say this: there's something to be said for never marketing anything as "free". When people see free, they immediately associate the product as having no perceived value.

Believe it or not, marketing it as 99 cents gives the phone much more than a 99-cent value simply because it isn't free.
 

badtzwang

macrumors regular
Sep 1, 2009
102
0
It has to be a marketing thing. Maybe 99 cents attracts more attention than free.
As someone who is in marketing, there's something to be said for never marketing anything as "free". When people see free, they immediately associate the product as having no perceived value.

Believe it or not, marketing it as 99 cents gives the phone much more than a 99-cent value simply because it isn't free.

Sorry ... but no. A phone that is free is going to sell a lot more than the same phone that is worth a $1. It's behavioral economics.

AT&T probably wants to push users towards their other free smartphone offerings. Maybe it has to do with the margin they are getting on the 3GS?
 

Lancetx

macrumors 68000
Aug 11, 2003
1,980
587
Texas
Still free at Apple Stores, Radioshacks, Best Buys, Targets, Wallmarts, etc...

AT&T corporate stores are going to be the only people to lose anything because of this...
Actually, when I was last in Walmart a couple of weeks or so ago, they had them priced at $1.00 even at the store I was at anyway. I thought that was kind of weird at the time when I saw it.
 

scott911

macrumors 6502a
Aug 24, 2009
722
439
Anyone who sits and calculates how much they will pay with their two year contract (thousands of dollars) will realize that 99 cents is no different than free.

Anyone who sits and calculates how many THOUSANDS of dollars they will pay over a two year contract, and still decides to get an "old screen" 3G to save $98 bucks, instead of getting the immensely more functional 4 is an absolute idiot.
 

erio

macrumors regular
Sep 20, 2004
100
11
Wow, talk about nickeled and dimed... and pennied too!
Hmm... I think this is for the 99%... Thanks AT&T, you @$$holes!
 

phillipduran

macrumors 65816
Apr 30, 2008
1,055
607
It's probably some account mumbo jumbo stuff. They were probably QQ'ing that they couldn't add the sales of a bunch of items at $0 to determine numbers information.
 

lostngone

macrumors 65816
Aug 11, 2003
1,372
3,114
Anchorage
Tax?!?!

My guess is something to do with taxes.

Something like, by "selling" the phone for 99 cents rather then giving it away for free they can claim the difference as a lose and get corporate tax beaks.
 

Steve's Barber

macrumors 6502a
Jul 5, 2011
773
0
AT&T most likely discovered that zero amounts caused red flags among sales execs which in turn forced them out from behind their desks to approve each and every sale. :)
 

Mad-B-One

macrumors 6502a
Jun 24, 2011
789
4
San Antonio, Texas
I rmember vaguely...

I remember that at one point, in Germany it was forbidden to offer 2-year contracts for free so they went to 1 DM back in the days. Reason: You offer "For free!" and it sounds like you don't have to pay which violates the "Morals and good beliefs" (sorry, only German, Suomi, Polski, & Svenska) - a very vague law used to prohibit unmoral practices such as phishing.
Thought behind that is: If you say "We offer it for free!" You actually mean "We offer it with no money down and milk you over the next two years!" Now, if you say, "We offer it for less than $1!" People are more likely to see you have to pay. "Free" offers could be mistaken for promotion events where things are given away for free no strings attached. Paying about $2000 / contract in total is everything but free. Therefore, the courts found it is an immoral contract.

I know, the US does not have such a catch-it-all law used to prevent people from looking for holes in the law. That has something to do with the English system of precedence law. So, you can look for loop holes. Oh and don't worry - the law in Germany does therefore not mean you violated that premise and you go to jail. It ends up preventing you from further using the loop hole once someone caught up on it.
 
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MacAddict1978

macrumors 65816
Jun 21, 2006
1,037
238
Must be a slow news day to bother with a post over 99 cents!

This is all marketing 101 people.

There's nothing premium about "free." The psyche of the average buyer (there have been millions spent on these studies, Google it) perceives getting an expensive item for 99 cents better then getting it for "free." Partially, it's the conditioning people have to retailers sales gimmicks from the past 20 or so years.

Buy one item, get one 99cents or bogo now meaning buy 1 get 1 half off instead of free.

Free is an ugly world too. It makes people think: cheap, junk, lesser, or what's the catch? This is why in jargon you'll usually see "complimentary" as the key word.

Marketing purposes this could work out well for store signage

4S 4 3GS
$199 99 99 cents

People like those 9's for some reason, and seeing those as apposed to "Free" gives a better preceived value. "Wow, that's almost $200 less!" vs. "Wow, it's free." You feel good about saving $200, more than you feel about free.
At least, that's what studies say.

When you go into a wirless store, how often do you have the perception that the free phones are the junk to get you in the door? They usually are.


There has to be a legal reason they are doing it, otherwise they wouldn't.
Sorry ... but no. A phone that is free is going to sell a lot more than the same phone that is worth a $1. It's behavioral economics.

AT&T probably wants to push users towards their other free smartphone offerings. Maybe it has to do with the margin they are getting on the 3GS?
It has to be a marketing thing. Maybe 99 cents attracts more attention than free.
 
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