I wonder if it has anything to do with CA, RI and whatever other states charge unsubsidized taxes for subsidized phones... You can't really charge 50 dollars in taxes on an item that costs $0.00 but you CAN if it's 99 cents.
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AT&T Raises Subsidized iPhone 3GS Price to $0.99
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There is a psychological effect where a product can be more popular being sold for a small price instead of being given away for free, because the small price provides a feeling that the thing has value even if it's a mostly symbolic price of $0.99.
You can certainly charge taxes on the face value of an item that's discounted to free, if the state allows it. Just like an item discounted but not all the way to free.
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Reminds me back when the sold unlimited data on the iPad and reversed it a few months later. Doesn't sound like they hold up their ends of the deals they are making with Apple, but who knows without seeing the contracts.
Reminds me back when the sold unlimited data on the iPad and reversed it a few months later. Doesn't sound like they hold up their ends of the deals they are making with Apple, but who knows without seeing the contracts.
There is no secondary or black market for other down-model handsets. Nobody wants them that badly... except for iPhones.
The 0.99 is probably too allow AT&T to run more credit checks.
The demographic that this is targeted at are really those that shouldn't be signing up for a data-plan to begin with since they can't afford. You get a "free" phone but then pay $30 a month for 2 years to cover that cost.
Its big corporations like Apple that are contributing to America's huge debt problem. What they are doing is very similar to "you pay zero down" scams that caused the housing crisis... not on the same scale ofcourse, but I am sure even the Apple FBs can see the similarity.
Its big corporations like Apple that are contributing to America's huge debt problem. What they are doing is very similar to "you pay zero down" scams that caused the housing crisis... not on the same scale ofcourse, but I am sure even the Apple FBs can see the similarity.
Thieves tend to gravitate towards certain products.
I work retail. You return certain things, red flags will be raised. Because thieves all seem to have the same pattern of what they steal.
So yes, I could easily see that they wouldn't have this problem with other phones. Not to mention there isn't much of a market for other phones, iphones do keep their value and sell well. And thieves do figure this kind of thing out.
In Hong Kong the top of the line iPhone has been $0 since introduction. Yet we do not have any debt problem. Our government has a surplus and we generally do not live on loans.
Arguably one of the bigger cases of last year's Supreme Court term involved AT&T's arbitration clause in their wireless contract. The plaintiff wanted to bring about a class action lawsuit against AT&T for charging big time sales tax on a free phone. The Court didn't address the tax aspect of the dispute, merely the arbitraion provision. Good case, but I won't offer a tl:dr for it. Here's the opinion:
http://www.supremecourt.gov/opinions/10pdf/09-893.pdf
No one is putting a gun to the consumer's head and forcing them to buy anything. I'm American and it makes me sick that people like you want to blame everyone else for your own irresponsible actions. You're an adult. Start acting like one and take responsibility for the holes your put yourself into.
actually Massachusetts (or was it Rhode Island or both?) does too. However, both of those states are small enough where New Hampshire is just up the road to duck sales tax. Same with us here in the DC area, Delaware is not too far away for tax free shopping! Californians aren't so lucky, most are too far away from Oregon to benefit.
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You guys are thinking too deeply into this, we've had a large number of these sold thru online and call center channels that were never activated. We verify the address matches on both the card and the shipping address.
Should have been done from the start we will never have another handset this expensive "free" again.
You guys are thinking too deeply into this, we've had a large number of these sold thru online and call center channels that were never activated. We verify the address matches on both the card and the shipping address.
Should have been done from the start we will never have another handset this expensive "free" again.
That isn't an argument; you're just throwing out random assertions. "Behavioral economics" is a huge field, and just typing the name of the field doesn't support anything.
In support of the "marketing person" who you are gainsaying, it is well known that people have difficulty making rationale valuations, and that they often use price as an information source as to how to estimate value-- thus a higher priced good may be perceived as being more valuable than a lower priced good, solely based on the information in its price. So "marketing person" may be right-- and that is supported by "behavioral economics."
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LOL, maybe you shouldn't sign a apartment lease then, which is the exact equivalent of the 2 year phone commitment. By your logic, it would be wise to only live in housing where you can pay cash up-front to own your unit outright. Or maybe you would be better off just continuing to live in your mom's basement.
also as far as sales and economics are concerned you cannot sell free. so your statement makes no sense.
LOL, maybe you shouldn't sign a apartment lease then, which is the exact equivalent of the 2 year phone commitment. By your logic, it would be wise to only live in housing where you can pay cash up-front to own your unit outright. Or maybe you would be better off just continuing to live in your mom's basement.
I think it is more that the "free" part of the phone suckers way to many people to get those data plans and end up eating the cost. Basically buying more than they should.
I always though it was stupid to get a cheap phone on contract when forking out 200 bucks you get a much nicer phone and it last you just as long.
Personally I think cell contracts are a rip off in the US. It is an example of what happens when you lack any real competition n the market.
Prices were falling when we had 6+ major companies down to 2 super and then 2 big price have gone up.
If you noticed prices between Verizon and AT&T have are about the same and if anything have gone up with both removing lower options and charging an arm and a leg for text messaging which is near 100% pure profit for them. Data cost for the consumer have gone up.
We have a duopoly for cell phone coverage in the US.
Let me get this straight--if someone takes your ice cream and licks it and gives it back, that's only a $.99 offense to you? It sounds as though you would actually eat the ice cream. Personally I would find that repulsive-- I would insist they pay for the entire ice cream, which would be a lot more than $.99.
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I agree with that part-- many people don't think through the real cost.
However, I think the actual economics-- amortizing the cost over the entire life of the plan-- is perfectly fine, in fact prudent, from both the customer's and the provider's perspective. The end user ends up paying for the product offering as they use it, which makes perfect sense to me.
Sales tax purposes..
- An item (in most states) that is given away for free is charged no sales tax.
- and item that is given away for free with requirement of purchasing additional items (such as cell phone service). must be charged sales tax.
so if an iPhone 3gs cost $300, it really cost at&t $321 (assuming 7% sales tax)
if they charged $0.99, then it cost at&t 300 and the customer $1.06
This will save at&t $21,000,000 for every 1 millions 3gs's sold.
- An item (in most states) that is given away for free is charged no sales tax.
- and item that is given away for free with requirement of purchasing additional items (such as cell phone service). must be charged sales tax.
so if an iPhone 3gs cost $300, it really cost at&t $321 (assuming 7% sales tax)
if they charged $0.99, then it cost at&t 300 and the customer $1.06
This will save at&t $21,000,000 for every 1 millions 3gs's sold.
This makes sense. I doubt other $0 handsets are going for $300 on eBay.
The possible answer
There are some states that require you to pay taxes for the full price of the item you are getting if its free. So prices are set at 99cents so they only have to pay taxes on that price. Its actually saves the customer quite a bit if you live in those states.
There are some states that require you to pay taxes for the full price of the item you are getting if its free. So prices are set at 99cents so they only have to pay taxes on that price. Its actually saves the customer quite a bit if you live in those states.
i paid 0 for my iPhone 4 on release date
Thanks for your input. Now I know that someone paid 0. Your help with this discussion is outstanding!
Is this the case where they can charge tax on the full price of the product whereas they could not if they said it was "free"? Full price as in the non-subsidized price.