I was just reading a CNNMoney story about “What smartphones really cost.” The piece details how much smartphones cost to manufacture, and how much they’ll cost the consumer buying one with or without a contract. But there’s one key expense that’s left out of the equation.
What expense am I talking about? Your monthly bill—which, most likely, you’re on the hook to pay for at least two years, and which will probably add up to more than your initial outlay in just two or three months.
According to the story, the components of the Apple iPhone 4, for example, cost $187.51. This smartphone retails for $199 if you’re buying one and signing up for a two-year contract at the same time.
Now let’s do the math on said contract to see what this iPhone will really cost you over that two-year span. The minimum data plan from AT&T is $15 per month, and the individual talk plan is at least $40 monthly. Heavy users can opt for plans that run $45 and $70, respectively. So even before adding in assorted other monthly fees, you’re paying at least $55 and up to $115 a month. A while back, I saw that the average iPhone user pays a $95-a-month bill. Therefore, over two years’ time, you’re paying a minimum of $1,320 ($55 x 24 mos.), an average of $2,280 ($95 x 24 mos.), and as much as $2,760 ($115 x 24 mos.). When you add in assorted fees and the $200 for the original phone purchase, you’re potentially looking at a bill north of $3,000 for two years’ worth of iPhone usage.
Are all the fun apps and tricks an iPhone can do worth $1,500 a year? That’s up to you to decide. Just don’t kid yourself that an iPhone only costs you $200.
There are plenty of affordable alternatives to annoying, expensive two-year cell-phone contracts, by the way, including less-flashy cell phone models with unlimited plans available in the neighborhood of $40 a month—or under $1,000 over the course of two years.
The NY Times also rounds up the best “entry level” smartphones—meaning ones that retail for under $100 if you buy a contract—though with such a contract you’d be paying at least $55 a month.