As I mentioned, I recently upgraded to the iPhone 5S. My carrier is Verizon.
The Verizon guy offered me every upsell he could. And, I get it. That’s his job.
He offered me $100 to buy my old iPhone 4S off me as part of the buy-back program. Ummm… no thanks. You realize I can sell the 4S for probably around $300 or so on Craigslist, right?
But, he also offered me the Verizon Edge program. This program is just like the AT&T Next, T-Mobile Jump or the Sprint One Up plans. The idea is that these plans allow you to upgrade your phone early if you want to always have the latest and greatest phone.
I tend to skip a generation. Apple releases new iPhones annually, but when it comes out I’m not always eligible for an upgrade under contract with Verizon. With the Verizon Edge plan, I could make the jump every time a new phone is released.
But, is it worth it?
If you go with a standard 2-year contract, then essentially the cost of your phone is being made up to Verizon over the course of the contract. That’s why you can get the phone for $199 (for the 16GB) versus the full retail price of $649.
Now, if I wanted to be able to upgrade to the iPhone 6 when it is released, Verizon thinks I should enroll in Verizon Edge. In addition to the cost of my plan, I now take on an additional monthly payment to pay for the phone itself. For the iPhone 5S, that’d be a monthly payment of $27.15 added to my bill.
If you upgrade your phone every year, then you’d be looking at a year-long cost which is exactly the same as buying the phone under contract. 11 months at $27.15 equals $298.5, which is the same as getting a 32 GB iPhone on contract.
On Edge, you can upgrade your phone every 6 months if you want to, but it makes no financial sense at all. You have to have paid off 50% of the cost of the phone to be eligible, so upgrading every 6 months would be like buying a phone at full retail cost every single year. So, instead of $299 for a phone for a standard contract, you’ll be paying about $1200 more. That’s $749 (retail for the 32GB) x 2 years = $1500.
So, essentially, it comes down to this…
- If you’re going to upgrade once per year, your cost out of pocket is exactly the same either way you go. The only thing you will avoid is the $30 upgrade fee they charge when you upgrade using a subsidized phone.
- If you’re going to try to upgrade every six month, you just like to spend money unnecessarily.
There you have it.