Thoughts on the cost of an iPhone


Like clockwork, once a year around this time I join a lot of other Apple geeks in pre-ordering the latest and greatest iPhone. I'm happy with my iPhone 6 Plus, but since I do a lot of photography with my phone -- some of it rivalling or surpassing what can be accomplished with a DSLR -- I wanted to upgrade again.  

I didn't go for Apple's iPhone Upgrade Program, simply because it looked like I would actually have to leave the house and drive to an Apple Store on pickup day, and I didn't feel like hassling with AT&T on changing my plan. For a while I thought about dumping AT&T for a carrier that would pay off my contract to switch, in particular T-Mobile. But instead I finally went the easy but expensive route of purchasing the device outright with "no contract required". 

That got me thinking about how much the iPhone actually costs me each year. In this case, opting for a 64GB iPhone 6s Plus at $849 is counterbalanced a bit by the $330 (or more) I will get from Gazelle for selling the iPhone 6 Plus from last year to them. So the net price without taxes is about $519.

Since we know that Apple's annual refresh schedule will bring us the iPhone 7 at the same time next year, that phone ends up costing me about $1.42 a day to own -- not including the data plan or taxes. I know a lot of people who drop $10 daily at their local coffee spot to get a morning and afternoon caffeine fix and tip the barista, so $1.42 a day is nothing. 

How does paying for the phone all in one shot compare to the Apple iPhone Upgrade Program? Well, of course it means that my business credit card will get one big charge instead of smaller monthly charge. But looking at that daily rate and assuming a worst-case 31-day month each month, we're looking at $44.02 per month. Apple's rate for the iPhone Upgrade Program for the same phone is $40.75 per month. Apple's plan is not only slightly less expensive, but also includes a year of AppleCare+ protection. 

Take a look at AT&T's Next Program with a 12-month refresh, and you're looking at a similar $42.45 monthly rate... also without AppleCare+ protection. Chances are also very good that unless you happen to get a sympathetic AT&T customer rep willing to knock off the rest of your two-year contract in exchange for your continued patronage, you'll be paying a one-time lump sum to get off of a regular two-year plan.

Apple's iPhone Upgrade Program is really a pretty good bargain, and one that the major US carriers have yet to match. Now that I'm apparently off contract ("no commitment" is the term used by AT&T), next year may be the year to jump over to Apple's plan.

One more thought on this Caturday-free Saturday -- although Apple has vehemently denied rumors that it's thinking about becoming a MVNO (Mobile Virtual Network Operator, essentially leasing the infrastructure provided by "real" operators like AT&T, Verizon, et al), I wonder if this could be the first step towards an all-in-one Apple plan where you'd buy the phone and service from Apple. 

The company is about to prove that it can lease its own equipment and provide protection for less than  what the traditional network operators can; perhaps the next step in 2016 will be for the company to offer a new iPhone annually plus unlimited service for one set monthly fee. It would make me very, very happy to get away from traditional carriers and use Apple for my service.