Who’s better off in Apple’s Upgrade Program? Apple or the consumer?

[Alex Rodriguez Jr.]

Prices have inches up every year since the 6s. And the Plus models debut at $100 over the smaller size.

So the prices have been going up, for years. They’re just very tactful about it. $15 one year, $20 the next. Every year users think “no big deal,” but they aren’t doing the math.

Before you realize it, you’re paying $50-100 more for a device; a device that barely offers anything advantageous over that which you’re replacing.

That’s on top of the increased costs for storage upgrades.

That’s how second tier Plus model prices went from $850 to $950 at second tier storage SKU.

You didn’t notice that price increase?

Netflix has gone up by 33% in 2 years. A $900.00 phone going up by $15.00 isn’t “skyrocketing”. That’s less than a dollar increase on my bill, which still makes it a smart decision for me.

 

[Lee_Bo]

I pay for my devices outright when I get them. That way they are mine to use for as long as they are supported, or sell if I want a newer device.

 

[iN8ter]

Netflix has gone up by 33% in 2 years. A $900.00 phone going up by $15.00 isn’t “skyrocketing”. That’s less than a dollar increase on my bill, which still makes it a smart decision for me.

I don’t lease phones.

15% of 900 is a lot of money.

That’s one month of your phone bill, and more than $1/mo. Added when you lease. It’s more like $5.65/mo.

And that’s ignoring the fact that prices have been going up year over year.

For example: The iPhone X’s base price was 35% more than that of an iPhone 5s, and the iPhone 8’s base price was 15% higher.

The iPhone Xr, arguable an overall worse device than the 8 Plus, costs the same price and every other iPhone is at the $999-1,099+ price bracket. The Xr is almost the same price as a Galaxy S9 and I think the same as a Pixel 2 (and likely 3).

Not only have the prices skyrocketed, but iPhone prices have had a steeper price increase than almost everything else in the industry when you factor in how the flagship SKUs are organized; unless you limit yourself to older models or weaker lower end models like the 5C, SE, and XR which are sold at laughable price premiums.

People that were leasing flagship iPhones for < $30/mo. A few years ago are now paying over $40 in many cases. That is a huge increase. That’s 240+ over the course of a lease.

That extra $10 can pay the access fee for your iPad or Apple Watch, but instead it’s overhead on top of that.

The leasing is amazing marketing as it makes people think of price increases in terms of single digit dollars. It works. We know it works. That’s basically all you’re telling me.

“Why not buy the phone that costs $200 more, it’s only $4/mo. more!”

 

[Quis89]

Renting an iPhone for $500 a year is not a deal for consumers. It just seems like it because they can afford the monthly payments.

How do you figure? If an iPhone is $1000, you'll either spend the $1000 outright or you'll take that cost and spread it across 24 payments. Either way you're paying the same $1000.

 

[BreakingKayfabe]

How do you figure? If an iPhone is $1000, you'll either spend the $1000 outright or you'll take that cost and spread it across 24 payments. Either way you're paying the same $1000.

Most likely because people are upgrading in the middle of the cycle and continuously paying instead of keeping a device and paying it off over time. That’s where it gets good for Apple and the carriers that have these leasing programs.

 

[phlamethrowre]

If the cost is the same as buying it outright, how is it any more expensive?

Don’t let math get in the way!

 

[Quis89]

Most likely because people are upgrading in the middle of the cycle and continuously paying instead of keeping a device and paying it off over time. That’s where it gets good for Apple and the carriers that have these leasing programs.

Yea. What's the typical resale value of a two year old iPhone? I'd be interested in how others go about it. My plan is to keep my iPhone X for another year and then it will be paid off. I'm not sure if I plan on selling it though or just using it as a backup. Though, if the resale value is enough to where I could get a new iPhone at the time for a decent out of pocket cost after whatever I make from my old X, then it might be worth it.

I've just always budgeted for the cost of a device in my wireless plan so I don't really think much of it anymore, lol.

 

[Quis89]

I kind of also think of it like this.

If I go 10 years of getting a new iPhone priced at $1000 every year, essentially I'm paying $500 a year. I'm trading out my phone each year so the phones are essentially costing me $500 a year to use. At the end of the 10 years I decide I want to keep the phone I'm using so I pay the remaining $500 to keep it. Over the course of that 10 years I'll have paid $5500.

Alternatively, I could buy my phones outright and spend $1000 each year. In this case I'll have paid $10,000 over the course of 10 years getting a new phone each year and paying outright for them. Of course, this doesn't factor in whatever money I made selling my old phones. So the only way I could see this as being more advantageous is if I'm able to sell my old phone for more than $500 (or half it's retail value) every year.

The second option seems like a gamble to me but I'm interested in how others do it and where they see the value in buying outright. How much is realistically being made on a year old iPhone? iPhones do hold their value so maybe it's common to sell a year old device for well more than half it's value?

 

[Alex Rodriguez Jr.]

I don’t lease phones.

15% of 900 is a lot of money.

That’s one month of your phone bill, and more than $1/mo. Added when you lease. It’s more like $5.65/mo.

And that’s ignoring the fact that prices have been going up year over year.

For example: The iPhone X’s base price was 35% more than that of an iPhone 5s, and the iPhone 8’s base price was 15% higher.

The iPhone Xr, arguable an overall worse device than the 8 Plus, costs the same price and every other iPhone is at the $999-1,099+ price bracket. The Xr is almost the same price as a Galaxy S9 and I think the same as a Pixel 2 (and likely 3).

Not only have the prices skyrocketed, but iPhone prices have had a steeper price increase than almost everything else in the industry when you factor in how the flagship SKUs are organized; unless you limit yourself to older models or weaker lower end models like the 5C, SE, and XR which are sold at laughable price premiums.

People that were leasing flagship iPhones for < $30/mo. A few years ago are now paying over $40 in many cases. That is a huge increase. That’s 240+ over the course of a lease.

That extra $10 can pay the access fee for your iPad or Apple Watch, but instead it’s overhead on top of that.

The leasing is amazing marketing as it makes people think of price increases in terms of single digit dollars. It works. We know it works. That’s basically all you’re telling me.

“Why not buy the phone that costs $200 more, it’s only $4/mo. more!”

Except it isn’t a lease. There are so many issues with your logic. First, it’s a finance with your choice of trading it in, just like a car. A lease implies there is an expectation you’ll be turning it in. There isn’t. You’re free to do whatever you want.

Second, you’ve ignored inflation in all other markets (especially electronics). You’re also ignoring that the iPhone 5 and iPhone X are two completely different devices in two completely different technological worlds.

Third, if you use a phone for anything other than texting and Twitter, two years for a device (using the keep and sell logic) is a long time. At 3 years, most devices are entirely obsolete.

I am not trying to convince you otherwise. You do what you believe is best for you. But I’m not sure you’re looking at this from an unbiased perspective.

Don’t let math get in the way!

This. It isn’t like you’re paying fees or interest to finance it.

 

[BreakingKayfabe]

Yea. What's the typical resale value of a two year old iPhone?

Just look at places like swappa right now and see what iPhone 7's are going for and you can get an idea.

The second option seems like a gamble to me but I'm interested in how others do it and where they see the value in buying outright. How much is realistically being made on a year old iPhone? iPhones do hold their value so maybe it's common to sell a year old device for well more than half it's value?

I spent $1,100 on an X last year. I'm spending $1,100 this year on a Max (if I decide to keep it). I easily get $650-$750 for the X. So I upgraded to a new device for less than half what the device actually retails for.

Edit: My X would be in mint condition since I'd get a replacement through Apple before I sell.

 

[Alex Rodriguez Jr.]

Edit: My X would be in mint condition since I'd get a replacement through Apple before I sell.

Don’t put this in writing man lol.

Is the hassle of shelling out a phone’s full price and having to worry about selling it worth the $100 for you? Genuine question, but it isn’t for me.

 

[phlamethrowre]

No offense to anyone but this is kind of a dumb debate. I’m on AT&T and the upfront cost of a new iPhone and the payment plans add up to the exact same amount in the end. The payment plan is basically interest free financing with the option of trading it in after 12 months or keeping until it’s paid for. One is not more expensive than the other.

 

[BreakingKayfabe]

Don’t put this in writing man lol.

Is the hassle of shelling out a phone’s full price and having to worry about selling it worth the $100 for you? Genuine question, but it isn’t for me.

What's the worry on selling it?

 

[Alex Rodriguez Jr.]

No offense to anyone but this is kind of a dumb debate. I’m on AT&T and the upfront cost of a new iPhone and the payment plans add up to the exact same amount in the end. The payment plan is basically interest free financing with the option of trading it in after 12 months or keeping until it’s paid for. One is not more expensive than the other.

The discussion was Apple’s. I agree with you 100% which is why I originally asked if it’s any different.

 

[Alex Rodriguez Jr.]

What's the worry on selling it?

Hassle. Time. Liability.

 

[BreakingKayfabe]

Hassle. Time. Liability.

Perhaps it is for you, but it's easy for me. I've sold a ton of electronics on OfferUp and people come to my place of business where I'm in full control.

 

[Quis89]

No offense to anyone but this is kind of a dumb debate. I’m on AT&T and the upfront cost of a new iPhone and the payment plans add up to the exact same amount in the end. The payment plan is basically interest free financing with the option of trading it in after 12 months or keeping until it’s paid for. One is not more expensive than the other.

I agree but I've seen people saying the financing options are more expensive so I was curious as to how they were coming to that conclusion.

 

[phlamethrowre]

I agree but I've seen people saying the financing options are more expensive so I was curious as to how they were coming to that conclusion.

I’m not certain about the Apple program but the AT&T program requires the sales tax upfront and payments that equal the exact same amount as if you paid full price. There’s no reason to give AT&T the full amount up front when they’ll let you pay interest free.

 

[Quis89]

I’m not certain about the Apple program but the AT&T program requires the sales tax upfront and payments that equal the exact same amount as if you paid full price. There’s no reason to give AT&T the full amount up front when they’ll let you pay interest free.

Verizon does the same thing as AT&T. I'm in agreement with you. Also, you can pay off the device at any time. So you're not locked into a contract or anything. It's just an alternative way of paying for your device.

 

[TwitchyPuppy]

Contracts were a much, much superior option for those users. They often got their new phone for free or on discount; and their bill didn’t balloon by $40-50.

Exactly. For the first time ever, I’m “financing” my phone through my carrier (2 years contract).

Traded in my X so I got the XS for $0 down and $50 off AC+. And my bill only went up $9/month.