I probably spend too much time thinking about the cost of cell phones. But there are a couple reasons: you have to sign a two year contract just about every time you get a new phone, and these contracts amount to thousands of dollars (usually at least $1k).
Fortunately (for you), in my quest to finally switch over to a smart phone, I’ve done some research to figure out how I could truly cut down the cost of owning one. Just to keep it simple, I’m going to only talk the iPhone here, and leave other phones out of it for now.
iPhone Cost and Service Savings Breakdown
Save with free texting (save $120-$480 over two years)
Texting plans seem cheap, ranging from $5-$20 a month, but that adds up over the course of two years. Now, you no longer need to send texts through your service provider. Instead, you can now download different apps like WhatsApp ($0.99 in the App Store) or TextFree (free-$4.99). These apps let you send messages to your friends for free. The only catch is that they also have to have the same app installed on their smart phone. While this may seem inconvenient, these programs are gaining a lot of attention and popularity (as I write this, WhatsApp is #18 on iPhone Top Paid Apps). If you’re really disciplined, you can prevent texting through your carrier altogether, or pay $0.20 per text if you’re in dire need.
Texting cost = $0/month
Save on data with AT&T (save $240-$1,080)
The 200 MB plan will suit average iPhone users perfectly fine. In order to help stay under the data usage requirement, connect to a WiFi network whenever it’s available to avoid using your allotted data from AT&T. WiFi is also faster, so this will create a better user experience, too.
Note that currently Verizon only offers at $30/month plan for unlimited data. So by choosing the cheapest plan on AT&T, you’re saving $360 on data plans over a two-year contract.
Data cost = $15/month
Save on Voice minutes (save $480-$720)
It’s not possible to get an iPhone without any voice plan. Most people require voice coverage anyway because, after all, it’s still a phone. Hopefully you can survive on 450 minutes a month, which will still set you back $39.99 on either Verizon or AT&T. If you talk more than that, you can save again by using various downloaded applications. Skype is now available for smartphones. Its immense popularity on computers has brought it to handheld devices now, allowing calls when there’s a WiFi connection available.
Voice cost = $39.99/month
Buy an older model iPhone (save $150-$250)
AT&T is currently offering the iPhone 3GS for $50. If you’re fine without the latest and greatest model, this should suit you. After all, the model is only a couple years old. The iPhone 4 retails for $199 or $299, depending on the model you choose. Yes, it does have improved features, but if trying to pare down the costs, this is one way to do it.
iPhone cost = $50, one time payment
Decline AppleCare (save $69)
You’re hedging your bets a bit here, but if the goal is to save money, this definitely makes the list. Plus, extended warranties are often not worth their cost. After all, the company issuing the warranty probably wouldn’t offer it in the first place if they knew they were going to lose money on the deal.
Declining AppleCare = $0
Employer/student discount (save ~$156)
AT&T offers a monthly discount in their Premier program. The discount is around 15% off your monthly bill (that’s what I can get through Tufts University), depending on your school or employer. One catch is that you have to pay $36 up front to activate. Still, if you followed the guidelines up to this point, you’d still save at least $156 even with the fee included. Verizon also offers a similar discount.
Employee discount = save $6.50/month (after including $36 upfront fee)
Add Up the Savings
Choosing the cheapest option in each category, the iPhone costs only $50 per month, with a 2-year cost to own of $1,208, before any taxes or fees. A lot cheaper than I thought when I started writing this article! Of course, this is far from free, but it sounds much more enticing and affordable than the higher end of the spectrum with all the added costs.
If you follow all these guidelines, you’ll save between $1,215*-$2,559** on of your iPhone bill over the course of two years! Even if you were going to choose the cheapest voice plan regardless, you would still save $735 with these suggestions. There are lots of other add-ons that you don’t need (Bluetooth headset, cases, chargers, etc.) and could consider as savings if you don’t buy them, but I didn’t consider these accessories in my analysis.
Do you have any other tips or apps that help save money? Let me know in the comments below.
(Also, AT&T users: is service really that bad? I’ve heard some say it is, but others seem to think it’s okay, so I’m considering a switch)
* = choosing the next most expensive service option in every category listed
** = choosing the most expensive service option in every category listed
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photo by: James Burrage