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
I’m thinking about getting a Droid and just skipping the whole iPhone craze all together.
I’ve considered that, too. I think there are pros and cons to both. I’ve gone back and forth, but I’m a Mac user, so I think that plays a big part in picking the iPhone over Droid.
I would like a smart phone but I can’t stomach the costs. $50 a month is less than I thought though.
Yea I’ve held off for the same reason. It costs a lot! It’s a bit hard to resist since it seems like everyone I know has one!
I would like a smart phone but I can’t stomach the costs. $50 a month is less than I thought though.
I am still trying to get my first iPhone, but will definitely save this post for when I do get one.
Great! Glad I could help. I don’t own one yet, either, but I feel more armed with knowledge now at least.
I’m still amazed how much we spend on phones.
I know, right? It seems a little ridiculous that I’m getting exciting about spending $50 a month just on a cell phone!
How about Google Voice as a free texting option? You can send texts online from your google voice account (along with a number of other free services, like voicemail transcription, and call screening). You’d still need a wifi connection to use your iPhone for that, but I’ve found it to be really easy and convenient, even without a smart phone.
That sounds like a good one. I’ll have to give that a shot. Thanks for the tip!
Much appreciate the remind about employee corporate discounts. Completely forgotten that and my company’s discount is 20%. But not on the data plan… at some point A T & T and others will realize that there are many of us they could snare if they offered us the iPhone w/o the data plan!
But I just can’t see spending $1200+ for two years for cell phone. My GoPhone only costs us $9 a month vs. the $50+ for the iPhone and its ilk.
I went to Tufts too! Smart cookies from the Hill.
How to save money using iPhone: AT&T offers the 200 MB for $15 and also 1 pre-paid minute for 10 cents. So you could get 100 minutes for $10 and 200MB for $15. If you do a lot of calling/texting, use the apps like textfree. So around $25 a month!
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I feel grateful after reading this post about how to save on mobile bills. I will surely implement all the ways for cut down my mobile bill.
I overuse my phone so yes I need to implement these ideas.
i need an implementation of ideas because they are very good
Jeff, interesting post. I bought a Droid Incredible 2 new on eBay for <$200, and I use the $29.95/mo plan from PagePlus, which includes 1200 mins of talk, 3000 texts, and 250 Mb of data a month on the Verizon network. That’s not enough data for streaming movies or music, but plenty for email, Google Maps, checking the weather and bus schedule, etc. And of course you can stream all you like while on WiFI.
Seniors especially can save on buying and using phones; while getting best customer service ever, and automatically donating to environmental causes if aarp member.
Anyone should consider Consumer Cellular as a reliable & ethical carrier.