Total iPhone 2-Year Costs: Charts & Details | iLounge Article

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Total iPhone 2-Year Costs: Charts & Details

On June 26, 2007, Apple and AT&T unveiled the first monthly rate plans for iPhone, answering one of several major unresolved questions prior to the device’s launch. Because readers have been interested in the true “lifetime cost” of iPhone, including both the hardware purchase and any required AT&T service fees, we have assembled these charts to help you learn what you’ll actually pay during the two-year contract time mandated by the companies for iPhone.

According to the companies, iPhone will require a $36 activation fee and the service plan to activate iPhone’s features, including its iPod functionality. Standard data plans will include unlimited use of data services, except for SMS text messaging, which will be limited to 200 messages under all iPhone plans. Additional payments of $10 per month ($240 lifetime) will up you to 1500 messages per month, while $20 per month ($480 lifetime) will give you unlimited SMS text messages. Visual voicemail and rollover minutes are included in all plans, and mobile-to-mobile calling, E-mail and web browsing will be unlimited under all of iPhone’s plans.

The only other difference between iPhone service plans is that the most basic individual service plan includes 5000 night and weekend minutes rather than unlimited minutes, as in all other iPhone individual and family plans. AT&T notes that family plans include only one phone line; extras are available for $30 per month per line.

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As the table shows, the minimum amount you can expect to pay for two years of iPhone service, plus a 4GB iPhone, is $1,975. The price goes up to $2,075 with an 8GB iPhone, and higher if you want to add SMS messages or minutes to the basic 450-minute plan. We noted in a prior article that AT&T’s most basic plan offers substantially fewer voice minutes than a comparably priced T-Mobile plan for a Danger Sidekick 3 phone, however, iPhone’s substantially superior data functionality, video features, and Wi-Fi may compensate for the price difference in some users’ minds.

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Family plan pricing offers some advantages at higher prices. The basic $80 per month package buys you fewer weekday minutes, but unlimited weekend and night minutes, while $100-$120 packages deliver more weekday minutes for the dollar as well. Your minimum cost of iPhone ownership on a family plan is $2,455, which with 700 minutes is financially the same as buying a 900-minute individual package.

Notably, iPhone users will be charged a $175 cancellation fee to end their contracts—an amount traditionally assessed only when AT&T has subsidized the purchase of a phone, which is not the case here. This may be an option for people who decide mid-cycle that they want to upgrade to a newer model iPhone, but is such a charge reasonable, especially given the high price of the iPhone hardware?

How do these prices stack up in your mind against what you expected? Are they better or worse values for the dollar than you’d hoped? Will you switch to iPhone from your current cell phone, or are the prices too high? We look forward to your comments.

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Comments

1

“This may be an option for people who decide mid-cycle that they want to upgrade to a newer model iPhone.”

Typically now if you want to upgrade your phone, they just reset the clock to zero and begin a new 2-year cycle (if you buy another subsidized phone).

Posted by jbelkin on June 26, 2007 at 11:22 AM (PDT)

2

$1975 just seems so excessive. I just bought a new $200 cell phone w/ a plan (four of them, actually), and it only cost about $290 at the time.

I know the iPhone is $400 more, but $2000 is just so high. There’s so much more I could do with that money then buy an iPhone

Posted by Crazydog on June 26, 2007 at 12:03 PM (PDT)

3

gah, I just realized I just read/said something wrong…

Posted by Crazydog on June 26, 2007 at 12:05 PM (PDT)

4

LOL, these aren’t even very accurate costs.  There’s no calculation of taxes, and the family plan costs are COMPLETELY off.  Where is the pricing based on # of phones?  Realize that the “family” plan only provides one extra phone for free.  So if your family is more than 2 people, you’re going to pay another $30 per phone- i.e. $160 base price per month for a family of four iPhones. I’m also skeptical because the current AT&T family plan is that base rate plus $10 for each phone.  So if it were $100, it’d be $140 for a family of four.

Luckily under my current family plan I’ll be able to add service to the phone for only $15 more than I’m paying right now (I have $5 200 text message plan built-in).  Thus, my 1/4 of the family plan will now cost $52.50 instead of $37.50, for a total cost of ownership of $2006 calculating 6% sales tax, activation, and the iPhone itself

I suggest iLounge calculate an average tax rate, because taxes added several hundred dollars to my TCO with just a $52.50 voice + data plan.

Posted by spimp31 on June 26, 2007 at 12:52 PM (PDT)

5

Since every phone incurs a monthly plan charge, I don’t see the point of trying to emphasize the fact that one pays an arm and leg for cell phone service (anyone’s service).

To me, it’s more meaningful to realize that the cost of the iPhone and activation charge (plus tax) can be amortized over the 24 month period of the contract. In this way, one can see that the monthly cost of the phone, relative to making do with a free phone, is about [($599*1.08)+$36] / 24 = $28.46 for an 8GB phone in an area that charges 8% tax.

Compared to activating a plan with another, cheaper phone, say, a $200 phone, the relative cost of the iPhone is about $17.96.

David

Posted by DavidG on June 26, 2007 at 2:44 PM (PDT)

6

can u use limewire on iphone?

Posted by meganyo on June 30, 2007 at 7:44 PM (PDT)

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