It’s consumer myth busting time! Who can explain whether it is cheaper to buy a smartphone outright, or to go onto a plan with handset include?
Feel free to use specific examples to show your reasoning. We’ll choose the best answer and commend the winner with a BS Buster badge for their profile.
I buy my handsets, which gives me greater choice of brand and model, rather than just the limited range on offer by the telcos in their plans. Then I am free to chose whether I want to be stuck in a 12 or 24 month contract, or just go month to month. I go for the latter, and have found that as new offers appear, I can jump to lower cost plans that offer the same unlimited calls/SMS etc, without any plan breaking penalty.
From a limited analysis at decision time, this has worked out to be less expensive for me.
It depends. On your timing, needs and whether you are carrier limited because of where you live. Wisdom says it is better to purchase outright there may still be exceptions.
Past experience with Telstra for business, the phone was always a full cost add on. There was always more choice if you purchased separately and better value. I now go month to month for the cheapest plan I can get, as it is really just a backup for travel out in the yonder. The phone is ancient, but works.
Optus is the only service we can get reliably in our house!
With one exception we have purchased three out of four previous phones out right. Typically from a phone specialist. Also we have paid month to month as this keeps up with the changing offers.
Unusually my current mobile was purchased as part of a plan. There was a big push to get the iPhone 8 out the door, with slow sales and the X on the way. Based on a current rrp of just short of $1,000 I have a plan phone included ($59 rounded) that provides un limited calls, SMS and 20GB of data for less than $17pm if you take the phone rrp out. The phone is effectively full rrp paid over 24 months.
This deal is long past, however it does illustrate it can be worthwhile looking at all the options. Alternately looking at similar BYO plans from Optus at that time the phone was less than half price. My iPhone 4s was still going after 6 years, but had dropped off the IOS and security update support cycle.
Two of our grown up offspring also buy outright as they believe it is cheaper and gives more flexibility with carriers and plans. Our other more cash strapped one always goes with a plan.
A phone with a plan is just another line of credit for many of us, but you can find the occasional better deal?
It’s less common now as the market is saturated however
$0 iPhone on a $60 plan was the typical business plan on Telstra few years ago.
Or $32 iPhone on a $40 plan ($72pm)
1 The 10 $0 phones I bought the bill was $60 each
2 10 I opted no phone same plan $60pm
3 10 I opted no phone $40 plan
The invoice bill for those? Read as
1 $60 (plan $28 phone $32)
2 $52 (there was an $8 loyalty credit)
3 $38 (there was a $2 ‘loyalty’ credit)
(Loyalty Code word for your handset fee)
That was and still is fairly rampant the price of the phone on the window with plan is usually the phone perceived cost over the plan, however the invoice with have tricky lines and handset credit distributions, significantly the cost of the phone at 24m x $x might be cheaper than the phone outright, but you need to factor in the 24m x $20 cost of being bumped up to the higher plan too.
The iPhones were $50 cheaper outright
I think the biggest BS that needs to be busted is carrying a 1400$ phone …
To me, ‘plan’ has always seemed like shorthand for ‘plan to take my money’. There are many sub-500$ phones out there that are eminently capable of performing everything needed from a technical perspective - coupled with the right plan, or my preference a pre-paid service, I find it is always cheaper to buy outright something that will do the job and find a suitable service separately.
It depends on what current plan you have, any discounts you have, how good the handset offer is from a mobile operator, and whether you are willing to use overseas handset retailers.
I did the calculations on a Samsung Galaxy S9 through my current operator Optus (which was offering a very good deal) against a handset from Kogan and it worked out about the same cost after 2 years.
The thing for me was, because I have an old SIM-only plan month-by-month, after the 2 years I would start to pay more each month as I would lose the monthly discount I have and would also have to pay more each month. They move you up onto a newer, more costly plan if you want the same data allowance. They also pre-load lots of junk onto your phone with a contract, which was a factor for me.
So I got a new (cheaper) phone outright and stayed on my current plan with discounts.
What is this eldritch device of which you speak? So many seem to commit their lives, their duty, time and all that is valuable to servicing it. Instead of debating how many angels can dance on the head of a pin or which method of subservience to this Godlet is better it might be better to quit its foul embrace altogether.
What I do when I am planning on changing phones is to look at how much it costs to buy outright and then compare that to the plans.
I get the cost of the plan, look at how much more it costs if that model of phone is included, and calculate the total cost of the phone over the contract specified.
Point 1. Phone Cost
What I have found on the three most recent purchases (that covers well over 10 years) is that the purchased phone is always cheaper. Often you are paying well over the odds for the phone on a plan. It is just like paying off a loan with interest via your phone account.
Point 2. Plan Cost
I am lucky to live in an area where I can select from multiple carriers, and by having my own phone I am able to select the plan that is right for what we need, rather than having to go with whatever plan a carrier has the phone attached. I save considerable money on this too.
Therefore I always buy outright because we save both on the phone and on the plan.
Something often overlooked is ‘How do I enforce my consumer rights if something isn’t right?’
Sometimes on a plan experiencing a faulty device can be trouble, as you can’t get it replaced by the manufacturer and telcos can often be incredibly slow, misleading or try and charge you fees to get the problem resolved.
I bought my phone outright because I knew if it developed a fault or didn’t perform as advertised I’d have a much easier time getting what I’m entitled to by law
Each phone/call contract for each telco needs to be compared with the own phone and call contracts.
I would possibly say that generally that the cost to buy a phone through a contract is similar to or more expensive than buying it outright.
However, if the telco only retails its own brands (or imports specific contract phones) it may not be possible to buy the same phone in the retail market (maybe online from say another country it may be possible but has risks).
Some telcos also offer phone insurance should the phone break due to something the operator did (e.g. dropped the phone) such insurance may be included (hidden cost) in the contract price and may be beneficial to those who happen to have a history of breaking phones. T&C need to be considered for the coverage.
If one chooses to buy a new phone every time a new model comes out (creating eWaste before the old phone dies), then some contracts may allow upgrades within the contract period which may be cost effective and a less upfront financial burden.
Owning a phone under a contract will most likely be a better financial proposition for most. But, many won’t have the necessary financial resources to buy a phone outright on or before contract signing and most likely would resort to purchasing on a credit card and paying 10%+ interest on the phone purchase. In such cases, the credit card interest payments for most will eat into the financial benefit of owning ones own phone and buying a phone under contract would possibly become more financially attractive.
In the end, everyone’s circumstances will be different and one needs to look at the whole cost of a phone/call contract with the cost of owning a phone on signing a call contract. It is not easy to say what would be best for any individual.
My assessment of choosing how to best purchase a smartphone is based on the following criteria.
NETWORK COVERAGE
We use Boost Mobile which was originally the Telstra Ugly Duckling after Boost Mobile was shafted by Optus, like all the other Optus resellers, and was resurrected by Telstra.
It has been promoted through the Telstra ranks to now enjoy the same full 4G network coverage as the other Telstra mobile offerings and is now treated as an equal.
We have consistently found that the Telstra network works in every town we have travelled through, and in many areas in between, even where there is no other mobile coverage such as on the Mitchell Highway in Western Qld where Telstra have added cell sites on their absolutely massive guyed microwave towers in the middle of nowhere.
SELECTING A PLAN
We are both on the now grandfathered Boost Mobile $40/month plan which gives us all we need for our usage, but there are now many other options.
SELECTING A HANDSET
As we are using the Boost Mobile network, we are able to choose from the range of Boost and Telstra prepaid handsets, or any other new or existing unlocked handsets, so we avoid being locked to any contract or paying excessive handset prices.
As the Macca’s ads used to state, “I’m Loving It”.
I chose to stay with Telstra as a carrier for their better coverage when I’m travelling around Australia. I did some price comparisons and worked out that it would be best to stick to my $40 pm BYO plan when I upgraded my phone. Since then, I have been able to increase my data allowance with Telstra for the same amount. So yes, for me it was cheaper to buy my smartphone outright.
We are on the old “grandfathered” Boost Mobile Ultra $40 plan which provides 3 Gb data per recharge plus 2 Gb bonus data every weekend but gives us 30 days to use it with no rollover.
The new Boost Mobile $40 plan provides 22 Gb data and has data rollover but has to be recharged at 28 days, thus requiring 13 recharges per annum instead of 12.
Here is a link to a Canstar Blue comparison between Boost Mobile and Telstra branded plans.
As we normally only use data to connect our laptop whilst travelling, we find the old plan satisfies our needs.
I know this is a little off topic but if anyone needs Telstra coverage but just wants a basic BYO plan, Belong is great. It’s just Telstra without any bells and whistles at half the price (it’s their budget subsidiary). Plus your data banks endlessly. By the time I go on holiday in January and am away from WiFi for a week I’ll have 20GB banked from my 5GB plan.
Who isn’t it for? Anyone who wants more than a basic text/call/data mobile plan, or who isn’t confident setting up and managing their own stuff (they have pretty much no customer support).
I am not interested in upgrading my prepaid phone (until it dies…), but economics have forced me to reconsider my provider. Telstra are offering an (online SIM order) monthly - NOT the usual 28 days - plan, from $10 to $40/month. Unlimited & untimed calls & SMS; 1GB -15GB/month data, with unused data rolled over indefinitely (& is “giftable” to any other Belong user).
It is called Belong (https://www.belong.com.au/mobile/plans). A Telstra shop employee knew nothing about it…
I understand that this won’t suit everyone: I use most data at home, via my NBN wifi: Belong gives me 3G/4G if needed when away from home. I have been using the $10/mth plan for 3 months now, with no problems - apart from an incredibly slow loading dashboard app…
Another benefit to be considered, is that Belong is also offering a $20 credit per referral to your own account, and also to the referred person’s account: this is available for up to 10 referrals ie potentially a $200 account credit for you.
This plan may also be worth considering for second, third etc phones in your household/family: there are no referral restrictions about family etc.
I have always bought iPhones outright, directly from Apple so they are guaranteed to be unlocked. Then I go for a no-frills service, currently a Boost Mobile $30 Anytime Plus which is an unlimited, 12Gb data per month that rolls over and accumulates, on Telstra wholesale. A BYO service with no contract enables migration to other services to take up the best deals
I just paid $99 for a year of free text and calls…plus 12gb of data to use when I choose, with Aldi mobile Using a hand me down phone from my son…it’s costing me $8 month…$2 week.
We used to buy our phones outright. One year I decided to use a plan. I had the new phone stolen from my desk while at work. We went to Telstra. They waived the plan, replaced the phone, all at no cost to us and so we have always bought on a plan since. However I had reported the theft to the police and I think that may have been the clincher.
Ok, so I never buy any goods on time plan schemes because I understand that there are extra costs incurred for the product in interest etc. However back in May when I was looking at purchasing a new Samsung S9 and did some research, I found Optus were offering me a new Samsung S9 plus 15GB data per month for $69.00 per month for 24 months. I did my sums and checked the full cost would be $1656.00 in total, how could I resist? In 24 months the phone will be mine and I have only paid $19.00 per month for the data. A new Samsung S9 costs $1200.00 and I have 15GB of data which I never use all of it, plus free texts and phone calls in Australia. This was better than Telstra who had a similar offer but $10.00 more per month and I had to get a new phone number which was inconvenient.
