If you recently upgraded to an iPhone 6, there's a decent chance that your sales associate told you about the Verizon EDGE program.
In short, you pay full freight for your iPhone 6, in 24 installments.
That means $600 or more, instead of the $200-$300 you'd pay with a carrier subsidy.
Is this a good deal, or not?
The bottom line - it depends on your data plan.
I'm usually skeptical of new pricing structures in the same way I'm skeptical of new casino games. Why would Verizon invent a new cost structure, if it didn't benefit them?
Ultimately, Verizon (and other carriers with similar plans) would prefer that users pay the full cost of their smartphones, rather than subsidizing that cost and making up the difference with monthly "access" fees over a 2-year contract.
Let's do the math.
Buying the cheapest available iPhone used to cost us around $200. This time around, we wanted 64 GB iPhones, so the initial outlay would have been $300 each, or $600 total.
Our family is on a 10GB shared data plan. (This is due in large part to Verizon recently lowering the cost of data.)
We used to pay $40 for each iPhone 5 in the family - so $80/month.
All told, including some corporate discounts through my employer, we paid Verizon slightly over $160 each month.
Because we have a 10 GB data plan, going with EDGE saved us some money.
First off, there was zero upfront cost. But instead of paying $600 on day 1, we pay $31.24 per month, over 24 months, for the phones themselves. That's a total of $750 per phone, $1500 total!
BUT, because we're on a 10GB plan, Verizon cuts the smartphone line access charge by $25/month. (!!!) Instead of paying $40/month for access, it's $15/month.
Meaning, our actual incremental cost. per iPhone. per month, is $6.24.
With 24 payments - that means we're paying a total of $150 for each 64 GB iPhone 6. Over 2 years, with no interest!
That is an absolute steal.
Our monthly invoice has remained just over $160.
And we have 2 iPhone 5's to sell on eBay.
AND under the terms of this deal, we can pay of the remaining balance on the iPhone 6, if we want to upgrade before our 2 years are up. No early-termination penalty.
At smaller-size data plans, the EDGE purchase doesn't make as much sense.
The $25/month reduction in the line-access fee is the key to making this equation work - and that's only at the 10GB/month level... it's phased out for smaller data plans.
But if you're a family with a large data plan, there is no reason to avoid the EDGE plan. The numbers don't lie.
My wife and I went through this same exercise when the iPhone 6 was released. But we had 2 big differences:
ReplyDeleteThe first is that we had to mail in our old iPhone 5 units and the second is that we can upgrade at the 12 month mark - for no additional cost - if we've paid off at least 60% of our iphone 6 units, if we mail them to Verizon.
To me that was the extra risk/reward with Edge - you can upgrade to the new devices right away, you just don't get to sell the old devices for a pot still profit.
Did they not mention this to you during your upgrade?
Sure, they mentioned the early upgrades with 60% of the phone paid off.
ReplyDeleteBut I'd hate to walk away from 60% of the equity in my ~14-month old iPhone 6 just to move up to a 6S.
I'm more likely to go the full 24 months - or close enough to make a final payoff payment less painful - and get an iPhone 7 on day 1.
Good point. But I've had so many problems with eBay scammers the last couple of times I've sold iPhones on there I almost don't mind just giving it up. I feel like it's similar to a car lease and worth it to get a new phone every year. I guess the Edge marketing really worked on me, since I think that's the big point they push with all these (like AT&T Next also).
ReplyDeleteI definitely understand that. Given the low incremental cost of ownership per month, you could almost consider it to be a $6-month rental / lease arrangement - who cares if you ever actually own the phone? You always have the latest and greatest.
DeleteThe proposition gets even more intriguing when you consider how simple it's gotten to backup and restore - I had my wife's 5S recreated on her 6 within an hour. You used to have to worry about re-arranging and re-downloading apps and so forth.
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ReplyDelete