Steve Kovach August 10, 2015 at 06:56AM
Despite what Apple and your carrier may tell you, your iPhone doesn't cost $199.
That price, which you'll see all over the ads and other marketing materials for the iPhone, is actually the subsidized price of the phone when you sign up for a two-year contract with your carrier. The real cost of the iPhone is $649 or higher, depending on the model you choose.
On Friday, Verizon announced a bombshell that will likely affect the way Apple markets the next iPhone. Verizon has ended service contracts, which means new subscribers won't be able to get an iPhone or any other smartphone for the subsidized price. Instead, you'll have to pay the entire cost of the device up front or agree to pay it off a little at a time in monthly installments.
It's a great move from Verizon, one that'll bring more transparency to your monthly bill. Before, Verizon would stuff the rest of the cost of your iPhone into your monthly bill, but you'd still have to keep paying the same price, even after two years when your phone was supposedly paid off. The new system ensures you can keep your phone for over two years and not have to worry about paying more than you have to.
Since Verizon is the largest wireless carrier, it puts Apple in a sticky situation this year — it probably won't be able to say you can get the iPhone for $199 and up. Plus T-Mobile, the third-largest wireless carrier, hasn't had contracts since 2013.
So, what will Apple do? If it says the iPhone 6S — or whatever the next iPhone is called — costs $649 and up, it'll seem to many that the iPhone is suddenly $450 more expensive than it was last year.
Instead, Apple will likely play up the monthly payment plans Verizon, T-Mobile, and the others offer. (AT&T and Sprint still have contracts, but also have monthly payment plans for phones.)
We don't know specifically how Verizon's phone payment plan will work, but it'll likely be similar to T-Mobile's system, which lets you get an entry-level iPhone for $0 down and about $27 per month for 24 months.
The most likely scenario at this year's iPhone event: When Apple brings up the new iPhone pricing on the big screen, it'll probably say something like "Starting at $0 down" instead of "Starting at $649." That'll be easier to swallow, and, in a strange way, could make the iPhone look even cheaper than it was before.
But the bottom line is this: No matter what a smartphone maker or carrier says, your smartphone will always end up costing you hundreds more in the long run than what you see advertised.
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The way you pay for your iPhone is about to change (AAPL) from Business Insider: Steve Kovach
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