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The Real Cost of an iPhone


How much does the iPhone really cost?I want an iPhone. The bug took a few years later to bite me than many others, but it did. I have played with countless iPhones and tested lots of cool apps. But oddly enough, it was actually the iPad that did it. I was playing with one yesterday and I was like “Okay, I get it. This is cool. Having this on my phone would be neat.”

Trouble is, I can’t justify the expense.

Because the iPhone doesn’t cost $99 for the 8MB 3G version or $199 for the 16MB 3GS version, as Apple currently advertises. The real cost of the iPhone is something like $1,400. Per year. Over a two year contract, that iPhone could cost you $2,600.

That’s because most people I know who have iPhones spend like $100 a month for their service contracts. (Add up a $60 voice plan, $30 data plan, and a $5 to $20 text plan, and that thing gets pricey).

I already have a Blackberry that costs me around $800 a year. That angers me when I start to think about it, although, compared to many smartphone users, I’m probably getting off “cheap”. Still, I can’t justify spending even more on communication technology than I already do.

For one, an iPhone is a definite want, not a need. We live in an era in which we think cell phones are needs, but are they really? If you have no other phone line, then having a phone for emergencies and a few minutes a month to make important calls is neccessary. But having e-mail and Facebook everywhere you go is a luxury plain and simple. And when you consider the $1,000-a-year price difference between an iPhone and a couple hundred dollars in prepaid cell phone minutes, it’s a big luxury.

I’m not judging anybody who has an iPhone out there. In fact, I’m jealous. I do, however, take pause when I consider what some things we take for granted actually cost. Our cars, our television, our phones.

Think about it this way: How many hours, days, or weeks do you have to work every year to pay for your phone?

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About David Weliver

David Weliver is the founding editor of Money Under 30. He's a cited authority on personal finance and the unique money issues we face during our first two decades as adults. He lives in Maine with his wife and two children.

Comments

  1. I totally agree. I just wrote about this same topic (well, similar anyway) on my blog this week. I can’t justify the cost and I sort of like being detached from the virtual world when I’m not at the computer. If I had an iPhone, I would spend way too much time connected to the internet, e-mail, etc. I actually ended up getting my boyfriend an iTouch for Xmas which kind of satisfies that iPhone craving without all the monthly plane expenses. Like you, I would love an iPhone, but just can’t justify it right now.

  2. *plan not plane ;)

  3. When you consider the time that the iPhone can save you in so many different situations by putting information and utility at an arm’s reach 24/7, for some people (including myself), it’s absolutely worth it.

    I would find a cheaper apartment before canceling my iPhone plan. It has literally changed the way that I live. That said, there are alternatives to text messaging, and it is possible to bring that bill down a bit.

  4. There is also the cost of not having an iPhone – being seen as a out of date, un-cool loser :-( Still I agree the benefits don’t justify the cost for me.

  5. I have a 4-year old flip phone with no apps, and it works for me! $65 a month or so. I would like a Droid, but not enough to pay for it.

    • @ Honey

      65 per month?!?! For an 4-year old flip phone this is HIGHWAY ROBBERY. You are actually paying more for less.

      Shop around, there is more to be had for a little more money (or a little less).

      The droid runs Google’s “android” software. Other phones on other phone carriers also run “android” software. Some cell carriers offer an “android” phone for as low as 60 per month.

      Holding on to old technology is not a good way to save money all the time, just like incandescent light bulbs and “clunker-like” cars…

      • At the time that I had the plan (4 years ago) it wasn’t a bad deal (I had gone over my minutes several times and this was the best plan to ensure that didn’t happen).

        Now there’s no way to switch without buying a new phone (because mine’s on the way out, I’m just eeking along as long as I can because the new phones are too expensive even with a rebate) AND getting a new contract, which I don’t want.

        I have often thought about getting a contract-less plan since that would be a very basic phone for a much lower price, but I have had the same phone number for 10 years and I don’t think my dad could make the switch :-)

        I will probably get a smart phone eventually but I have to pay off the last $2K in credit card debt and save for the cost of the new phone before that happens. Whether something’s cheaper in the long run doesn’t matter if I don’t have the money to do it now…

      • how old r u?

    • My problem is I don’t extacly know how to get started. What is the first step, and the subsequent steps. While Im trying to understand while reading I think there is too much imformation on what thr individual make instead of how to make the money or even getting started making the money. I need help.

  6. I have smart phone through Sprint. unlimited Data, text, mobile-to-mobile, and 450 minutes for $70 a month. To me that is very worth it and has changed the way I live and work. I’ve been very happy with their network so far. 1800 total 2 year cost is much more manageable plus you don’t have to live within Apple’s walled garden.

  7. I agree…and I own an iPhone!

    It’s a luxury and it’s one that I shouldn’t have purchased when my income was so low.

    When my contract is up, I’ll be headed back to a simple flip phone unless my income improves dramatically.

  8. I agreed 100% with this post – until I got an iPhone for Christmas. You can’t really compare an iPhone to other phones (even other smartphones like a Blackberry, which I had before), because it does so much more. I didn’t have an iPod for instance, so my iphone doubles as that. It’s also a sophisticated GPS device.

    The GPS capabilities on my iPhone ALONE are worth the additional $20 a month I pay (my monthly bill is $89, including taxes). I can’t tell you how many times it has saved me en route when I get off track by re-routing my map from whatever my current location is. It also shows me traffic patterns so I can avoid routes that go through red or yellow zones (jam or slow traffic).

    Having email, facebook and the internet at my fingertips is a luxurious time zapper for the most part, but some of the apps are truly helpful, time saving, and perhaps even life changing.

    I would cancel my home internet subscription before my iPhone – why pay for it when I can get everything on my iPhone anyway?

  9. Apple always touts that the reason the price of the iPhone is so low up front is that AT&T are subsidizing the cost through your monthly payment (which is true). But if the list price of an iPhone is $600 of $800, why can’t you pay that and tell AT&T to take a hike? Data plans with other carriers are much cheaper. I’d consider an iPhone if I could buy the device upfront and purchase whichever data plan I want with whichever carrier I want. Until then, no iPhone for me.

  10. I’m glad to know that you also look at things you spend for in terms of how much work I actually put in to be able to afford a particular purchase.

    If the benefits justify the time and work I put in to be ale to come up with the money to buy it, then I would go for it. Otherwise, I am better off thinking of other easy to increase my income to be able to afford a ‘luxury’.

  11. Agree 100%! At the end, you start to suggest the cost being even higher than $1,400 of AFTER-TAX money. Add back the income and SS taxes from wages to anything you buy, and the REAL real cost is much higher.

  12. I actually get 27% off my bill through work. And I use the free texting program. My bill is about $60. Still not cheap but better than $100

  13. i couldn’t justify getting an iphone because of the service plan either – especially because i pay $10 a month for my line on the family plan($30 total per month right now since unlimited text is thrown in, which i plan on taking off for reasons i explain below) for a hefty enough chunk of minutes that I hardly use since I get free nights/weekends and free at&t – at&t calls.

    One day though, I realized that I needed an organizer. I was deluding myself thinking my old fashioned moleskine was working – it was just too big to be convenient, and I didn’t have the pocket space to feasibly carry it on me ALL the time. I didn’t always have a minute to flip to the right date and record what i needed to do, I was constantly losing the log sheets i had to track my finances, and my ADD was just killing my ability to remember all my commitments, all my times, and my due dates – in short, i couldn’t function.

    So I got an ipod touch – and I gotta say, I feel like I have a one up on every iphone user out there. Between hotspots, my work, my home, and my college I am connected to wifi a solid 80% of all times (and about 15% of that is because I’m driving – not like I’d be able to utilize internet then anyway) and with a wifi connection, I pretty much have an iphone. Even without a wifi connection, all of my organizational apps (calendar/integrated task list that syncs to google cal, stopwatches, classwork manager, mobile office suite, pdf organizer/library, pdf editor – i can take notes on my pdfs straight to the touch, checking acct balance sheet, etc) are still fully featured and usable. I’ve thought about getting rid of my texting in favor of just emailing because everyone seems to have a smart phone these days, and i have wifi enough of the time to lower the difference in time it would take for me to get a message.

    PLUS, my touch is way faster than my friend’s iphones – not necessarily in internet (which varies based on how strong my connection is, most of the time it’s just as fast as 3g but at times it does slow down), but in just opening my apps and using them. There are some features I wish my touch third gen had that all of the iphones have – camera, voice recorder…and that’s about it, but both features were integrated into the fourth gen model of the touch. The touch is way more expensive than the iphone (I dropped a cool $400 for my 64 gig model), but when I think of all the money I’ve saved not just from the productivity suite i have in my pocket, but from what I’m not paying for a service plan, I can’t help but smile.

    seriously, if you like the apps and you have a wifi connection at the places you spend the most time at – work, home, school – invest in an ipod touch. You won’t be disapointed.

  14. This article is so great, and it makes me feel a LOT better about what I recently changed in my life. I had a blackberry for about a year in a half. I went from a regular phone to the blackberry, and at the time I was living at home and making a contribution of a couple hundred dollars to help my mom out with everything but an actual ‘rent’ payment. After paying over $150 for my blackberry services/plan along with my sister who I share a plan with I decided I don’t need to be in constant contact with the world. I have internet and a laptop at home and I’m at a computer majority of the day with my 9-5. So, when I was due for an upgrade, I ‘downgraded’ to a reliable (so far), sturdy flip phone with the basic functions. It calls, it texts and has other capabilities if need be. Sometimes, yes I miss the way the smart phones work, but for $60 less a month.. I’m over it! Thanks for writing this article.

  15. I felt the same way – envious of the iPhone users but unwilling to pay the exorbitant monthly fees levied against their users – until the release of the new iPhone 4s. Craigslist has been flooded with 4’s since then and it was easy to pick up a 64g iPhone4 for $300. All I did then was jailbreak it & flash it to MetroPCS (using free software readily available within minutes online. The result? Unlimited everything – text, talk, & web – for a flat $55/month. That’s $660/year. The best part is that I’m not locked into any contract whatsoever, and the money I’m saving in service fees will pay back the entire cost of the phone within 6 months.