Can someone verify my math here?

Discussion in 'iPhone' started by xxray, Oct 12, 2017.

  1. xxray macrumors 6502

    Joined:
    Jul 27, 2013
    #1
    So I've been doing some math on how much money I'd be spending per year if I kept my current iPhone vs if I sold it and bought a new model, and I'd like some peer reviews to make sure my math is correct.

    I bought a 128GB iPhone 7 for ~$800 with tax last year. Cost of ownership per year would be:
    • 1 year - $800
    • 2 years - $400
    • 3 years - $267.68
    Let's say I sell my phone now for ~$500. That would mean I would have paid ~$300 to use it for one year. If I buy an iPhone 8+ for $860 with tax, that would mean that I would be spending $360 to upgrade. ($860 - $500 I made from selling iPhone 7)

    Therefore, it would be a better value to sell my iPhone 7 and get an iPhone 8+ than it would for me to keep my iPhone for another year and buy next year's phone brand new. Is this correct?
     
  2. Givmeabrek macrumors 68040

    Givmeabrek

    Joined:
    Apr 20, 2009
    Location:
    NY
    #3
    Excellent video. Explains it nicely. There is very little benefit to holding off for another year. Upgrade every year!
     
  3. WolfSnap macrumors 6502a

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    SoCal
    #4
    I've been upgrading every year. Works well for me.
     
  4. profets macrumors 68040

    Joined:
    Mar 18, 2009
    #5
    Lol that video is awesome. The formula at the end helps a lot, as I found if you punch in different resale values it changes things quite a bit.

    For example, in the video he was putting the new purchase of a phone at $1000, resale after year 1 at $400 and resale after year 2 at $200. That results in a savings over time (when upgrading every 2nd year as opposed to every year) at $200/year.

    However, I find that $400 resale after 1 year to be a bit low (I've always sold my phones after 1 year and have usually sold around 2/3 the original price and upwards of 3/4 the original price).

    Say a new phone each year is $1000, selling after 1 year gets you $600 and selling after 2 years gets you $300. Plugging into the formula to compare upgrading every year as opposed to upgrading every other year and you'll save $50/year doing the latter.

    Anyway, back to the OP's question - the only thing you're missing is the money you'd make from selling your iPhone 7 next year (if you were to keep it for 2 years).
     
  5. timeconsumer macrumors 65816

    timeconsumer

    Joined:
    Aug 1, 2008
    Location:
    PNW
    #6
    Yes, basically if you keep buying and selling, it will cost you approximately $360ish per year to own an iPhone. If this is what you're looking to do, then why not just use one of the carrier's device payment plans and turn in at the halfway point? It's easier and don't have to worry about selling it. Of course, the longer you keep the iPhone, the cheaper the yearly cost of ownership would be.
     
  6. xxray thread starter macrumors 6502

    Joined:
    Jul 27, 2013
    #7
    Thank you! I don't use any of the 4 main carriers. As a result, my phone bill comes out to $13 a month. Helps me save a lot of money.
     
  7. timeconsumer macrumors 65816

    timeconsumer

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    PNW
    #8
    Fair enough, I was considering that myself.
     
  8. TravisPNW macrumors 6502

    TravisPNW

    Joined:
    Sep 15, 2017
    Location:
    Renton, WA
    #9
    Your problem is deciding if the 7 to 8 upgrade is worth it... most of what I've seen from users say it isn't.

    (I upgraded to the 8 Plus from the 6s Plus and it definitely was... but it wasn't last year to go to the 7 :) )
     
  9. xxray thread starter macrumors 6502

    Joined:
    Jul 27, 2013
    #10
    I actually wasn't seriously considering upgrading to the 8 until I had done this math. When I realized I'd be losing money by staying with my 7 for another year and upgrading versus selling it now and upgrading, I realized there's no reason not to upgrade to the 8 now. Also, I have been missing the larger screen on the +, so I'm looking forward to switching back to a + phone.
     
  10. TravisPNW macrumors 6502

    TravisPNW

    Joined:
    Sep 15, 2017
    Location:
    Renton, WA
    #11
    $360 for a year of use is still $360 saved if you don't feel like the upgrade is worth it.

    For me the clincher was getting $275 from Verizon for my 2 year old 6s Plus. I kept the phone 2 years and the math was still favorable. I ended up with bigger upgrade this year.

    8 Plus is an amazing phone.
     
  11. profets macrumors 68040

    Joined:
    Mar 18, 2009
    #12
    Just as an fyi - should also weigh this against the depreciation of the current phone’s resale value (assuming one would sell it when upgrading).
     
  12. xxray thread starter macrumors 6502

    Joined:
    Jul 27, 2013
    #13
    Glad you're happy with your phone! If I kept my phone for another year, the 7 would end up costing about $400 per year. ($800 divided by 2 years used). If I upgrade now, I'll pay $360 to get the 8+, which is less than the $400 it'd cost me if I didn't sell the 7 and kept it for another year.

    So, see what I mean? It doesn't save me money to keep my phone for another year. It actually costs me more money than upgrading now.
     
  13. rui no onna macrumors 601

    rui no onna

    Joined:
    Oct 25, 2013
    #14
    Typically, first year depreciation is the steepest particularly if you always get top capacity.
     
  14. timeconsumer macrumors 65816

    timeconsumer

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    Location:
    PNW
    #15
    It would only cost you $400 per year if you chose to keep the phone, otherwise the cost would be less.

    Use for two years and then keep the phone:
    $800/2 = $400 per year

    Use for two years and then sell the phone:
    $800 - $300 (rough estimate) = $500 or $250 per year
     
  15. TravisPNW macrumors 6502

    TravisPNW

    Joined:
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    Location:
    Renton, WA
    #16
    Exactly my point when I said the math was still favorable.

    I got $275 for my 6s Plus after 2 years of use. I jumped on it and upgraded to the 8 Plus.
     
  16. rui no onna macrumors 601

    rui no onna

    Joined:
    Oct 25, 2013
    #17
    Hmm, would be interesting to see what would happen if one put the price differential for upgrading towards AAPL stock purchase instead (with dividends reinvested).
     
  17. xxray thread starter macrumors 6502

    Joined:
    Jul 27, 2013
    #18
    Aaaaanndddd this is why I wanted someone to check my math. Thank you very much!
     
  18. flat five, Oct 13, 2017
    Last edited: Oct 14, 2017

    flat five macrumors 601

    flat five

    Joined:
    Feb 6, 2007
    Location:
    newyorkcity
    #19
    not really sure if that video is the right way to see it..

    for one, no matter how you slice it, you're paying more money..

    it reeks of a 'buy one, get second one at half price' type of marketing in which you're sort of tricked into believing you're saving money or getting a good deal but in reality, you're spending more.. especially when you only actually need one item.

    however, that's not my point...
    ------------

    i think when you buy every year, yes, you pay more money.. and on top of that, you're getting less per dollar..

    yearly upgrades are more marginal as far as user experience and performance and features are concerned.. in other words, if you upgrade every year, you're getting less bang for your buck..

    where as if you upgrade every two years or three years, the difference between your previous phone and the new one is a lot more noticeable.. you pay less money when skipping years AND, the money you do spend gets you more noticeable enhancements/features per dollar.

    --------
    idk, that's my initial take on it at least.. i may refine the thought later or find a way to say it more succinctly but yeah, there's more to be considered than the way one might be led to believe from that video.

    ----
    also, additional thought--- built into the cost of each phone is iOS.. if you skip a year with the phone purchase but upgrade the OS every year, you're effectively paying half price on the hidden OS cost.. when you buy a new phone each year, you're also paying for iOS every year.
     

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