Resolved So how does paying for an iPhone work?

[DudeMartin]

An hour ago or so I have discovered that my current provider, T-Mobile, will finally support iPhones. I have never had a smartphone, so I have never looked into purchasing a data plan for one of my phones. However, I feel that it is time to stop living under a rock and buy into these smartphones. When I went to T-Mobile's website and looked at a plan for an iPhone, it looked something like this:

$50 for unlimited talk and text, and 500 megabytes of high-speed data.
And then adding on a second line is $20.
And other lines after that are $10.
If you want 2 gigabytes of data, you need to pay $10 extra.
If you want unlimited data, you need to pay $20 extra.

That seems pretty straightforward, but the part where I was confused was the actual pricing of the phone. It says that you need to make a down payment of $100 when you sign up, and then pay $20 monthly for 24 months. This means that the iPhone will cost me $580 when fully paid off. This seems very expensive for a phone, coming from a non-smartphone user. I always thought that the most recent model of the iPhone always cost $200. I am making this conclusion due to the fact that every time that I have clicked on the 'Buy Now' button in the 'iPhone' section on the Apple website, it said "Starting from $199." So I figured you would pay $200 for the phone (which at that point it would be paid off) and then pay monthly for the actual service. But for T-Mobile it seems that I have to pay $580 for the phone and then pay monthly for the actual service. Now obviously, $580 is a lot more than $200, so I am confused as to how this could be.

Can anyone clarify how the pricing works?
Thanks.

 

[CEmajr]

An hour ago or so I have discovered that my current provider, T-Mobile, will finally support iPhones. I have never had a smartphone, so I have never looked into purchasing a data plan for one of my phones. However, I feel that it is time to stop living under a rock and buy into these smartphones. When I went to T-Mobile's website and looked at a plan for an iPhone, it looked something like this:

$50 for unlimited talk and text, and 500 megabytes of high-speed data.
And then adding on a second line is $20.
And other lines after that are $10.
If you want 2 gigabytes of data, you need to pay $10 extra.
If you want unlimited data, you need to pay $20 extra.

That seems pretty straightforward, but the part where I was confused was the actual pricing of the phone. It says that you need to make a down payment of $100 when you sign up, and then pay $20 monthly for 24 months. This means that the iPhone will cost me $580 when fully paid off. This seems very expensive for a phone, coming from a non-smartphone user. I always thought that the most recent model of the iPhone always cost $200. I am making this conclusion due to the fact that every time that I have clicked on the 'Buy Now' button in the 'iPhone' section on the Apple website, it said "Starting from $199." So I figured you would pay $200 for the phone (which at that point it would be paid off) and then pay monthly for the actual service. But for T-Mobile it seems that I have to pay $580 for the phone and then pay monthly for the actual service. Now obviously, $580 is a lot more than $200, so I am confused as to how this could be.

Can anyone clarify how the pricing works?
Thanks.

Tmobile separates the cost of the device and your service plan. The other carriers give you an iPhone for $200 upfront but they factor the cost of the device into their rate plans by charging a higher rate than Tmobile does. Once you pay for your device on Tmobile then the $20 is gone and you're back down to $50 per month. With the other carriers you get no discount on your monthly bill after you have lived out your contract and repaid them for the device.

In simpler terms, it's the same thing that had always been done but now the device and the rate plan are separate charges and there is no contract for your rate plan anymore just an agreement to pay Tmobile for the device.

 

[DudeMartin]

Tmobile separates the cost of the device and your service plan. The other carriers give you an iPhone for $200 upfront but they factor the cost of the device into their rate plans by charging a higher rate than Tmobile does. Once you pay for your device on Tmobile then the $20 is gone and you're back down to $50 per month. With the other carriers you get no discount on your monthly bill after you have lived out your contract and repaid them for the device.

In simpler terms, it's the same thing that had always been done but now the device and the rate plan are separate charges and there is no contract for your rate plan anymore just an agreement to pay Tmobile for the device.

Is the cost of the phone itself the same?

 

[ipaclansite]

Any high end smartphones these days are in fact in the $500-700 range.

The cost of the phone is the same, all the carriers are doing is dividing the cost of the device over the term of your cellular contract in order to pay off the rest of the price of the phone. This is why carriers charge you a higher monthly rate.

What T-Mobile is doing is essentially the same thing, but once you have paid off the price of the phone, your monthly rate goes down, the other carriers dont do that and will cash in on the additional monthly payments you make to them even if your phone was already paid off in full.

 

[DudeMartin]

Any high end smartphones these days are in fact in the $500-700 range.

The cost of the phone is the same, all the carriers are doing is dividing the cost of the device over the term of your cellular contract in order to pay off the rest of the price of the phone. This is why carriers charge you a higher monthly rate.

What T-Mobile is doing is essentially the same thing, but once you have paid off the price of the phone, your monthly rate goes down, the other carriers dont do that and will cash in on the additional monthly payments you make to them even if your phone was already paid off in full as the "monthly payment" to buy the phone is hidden from you.

Okay that answers all of my questions. Thanks to both of you.

 

[Mlrollin91]

Is the cost of the phone itself the same?

The phone on T-Mobile is actually cheaper. They are charging $100 + $480, so $580 for the phone. Meanwhile the actual retail value of the phone is $650. (16GB speaking that is.)

Yes, when you pay $650 the phone is factory unlocked, but you can get an IMEI unlock for less than $5.

 

[lordofthereef]

The phone on T-Mobile is actually cheaper. They are charging $100 + $480, so $580 for the phone. Meanwhile the actual retail value of the phone is $650. (16GB speaking that is.)

Yes, when you pay $650 the phone is factory unlocked, but you can get an IMEI unlock for less than $5.

Are we sure the unlocks will work for the tmobile locked phones and that they will be $5? I ask because att unlocks are cheap but verizon, for example, are not, presumably because the number of people able to do it are fewer in number.

 

[Mlrollin91]

Are we sure the unlocks will work for the tmobile locked phones and that they will be $5? I ask because att unlocks are cheap but verizon, for example, are not, presumably because the number of people able to do it are fewer in number.

Obviously I am guessing because none of us know but it's a gsm phone so unlocks should be very similar to AT&T. Verizon and Sprint are cdma which, I believe makes it harder. I definitely could be wrong but regardless if you don't need it unlocked up front T-Mobile is cheaper. And after 24 months you get the unlock for free, or whenever you pay off the phone.

I really hope AT&T switches to something like this.

 

[lordofthereef]

Obviously I am guessing because none of us know but it's a gsm phone so unlocks should be very similar to AT&T. Verizon and Sprint are cdma which, I believe makes it harder. I definitely could be wrong but regardless if you don't need it unlocked up front T-Mobile is cheaper. And after 24 months you get the unlock for free, or whenever you pay off the phone.

I really hope AT&T switches to something like this.

Verizon and sprint, I was referring to gsm. The 4s on verizon is $100-ish. I can only speculate its because there aren't the same number of unlockers. I'm not certain being gsm has anything to do with it. The unlocks seem to be carrier specific. I would expect tmo unlocks to cost a good bit more than $5, at least initially. That's just based on trends, nothing more.