If you're a current iPhone owner, or a current AT&T, Sprint, or Verizon customer, you may looking forward to the day when you can buy the new iPhone. But, if you don't check one important piece of information, that day could turn out to be much more expensive than you anticipated.
That's because the US$199, $299, and $399 prices advertised for the iPhone aren't the price available to everyone. That's the price for new customers and existing customers who qualify for upgrades.
The Subsidy System
Cell phone companies discount, or subsidize, the price of the phones they offer. If customers paid full price for their cell phones, they'd pay a lot more than the advertised prices--and probably a lot fewer phones would be sold. For instance, the full price of the iPhone is over $600. AT&T, Sprint, and Verizon pay Apple the difference between that price and what they charge customers--they subsidize the price--in order to boost sales of the phones and attract more customers to their services. Since the companies make the most money on their monthly calling and data plans, this is a good deal for them--and for customers.
Who's Eligible?
But not every single customer or potential customer is eligible to get the lowest possible price when upgrading. If they were, then so many customers would upgrade each year that it would be hard for the phone companies to make money. Instead, they limit the biggest subsidies--the ones that make the iPhone cost $199-$399--to customers who:
- Sign a new two-year contract and haven't had service with that company before
- Switch from another phone company and sign a two-year contract
- Have been paying month-to-month and are willing to sign a two-year contract
- Have been a customer of that company for a pre-determined amount of time (usually 12-24 months, but it varies by phone company).
Customers who don't fall into one of these categories have to pay higher prices, sometimes $100-$200 more, sometimes the full price of the phone.
Checking iPhone Upgrade Eligibility
So, if you're an AT&T, Sprint, or Verizon customer and want to get the new iPhone--whether you already have one or this will be your first--you need to know how much you're going to pay. You might be happy to pay $199 for a new iPhone, but not so interested if it's $599.
To prevent any surprises in the checkout line, you can check your upgrade eligibility online. To do that, and to find out how much an upgrade to the new iPhone will cost you, use Apple's upgrade eligibility tool.
