Since the first iPhone was released, we have seen the same cycle. Every year Apple releases a new iPhone. For the first four models, this happened in June. Since then, it has been in September. They make no official announcements as a company, but if you google “new iPhone” anytime after Memorial Day, you will have more information at your fingertips about the new phone than you could possibly want.
Apple tends to also follow cycles for the release of iPads, laptops, desktops and presumably the Apple Watch. Do yourself a favor and bookmark MacRumors’ Buyer’s Guide. It will tell you when to buy and not buy.
So what does this mean? How can you exploit this information to make yourself happier and your bank account larger? I’m glad you asked.
Rule #1: Always buy an iPhone the day it comes out
Yes, it seems appealing in mid-June to upgrade your one-and-a-half-year-old phone. Don’t. Just because you have an upgrade available doesn’t mean you should throw money into a fire. Undoubtedly the new phone will be available before the end of Summer, and the phone you currently wish to purchase will cost $100 less. Moving your contract off-cycle is silly. It basically guarantees you will always be several months out of date for the exact same cost as it would take to have an up-to-date phone.
Rule #2: Understand the ACTUAL price of the phone you are purchasing.
I know the price says free. It’s actually $450. Allow me to explain...
Your two-year contract is worth many, many dollars to AT&T or Verizon. (This is why T-Mobile’s plans are often much cheaper, but I digress.) It used to be easy to tell how much of a premium your carrier charged you because they charged more for an iPhone data plan than other generic data plans. Now, it’s more difficult. But regardless of how much they actually make on your two-year contract, the number is more than $450 because that’s the amount of money they are knocking off the phone price.
With Contract / Without Contract
iPhone 6 Plus (base model): $299 / $749
iPhone 6 (base model): $199 / $649
iPhone 5S (base model): $99 / $549
iPhone 5C (base model): $0 / $450
When you decide which phone to buy you may decide the 5C is all you need. But you also need to consider that the price options are not $0 and $200. They are $450 and $649. You pay that $450 no matter what you do.
The additional $200 in this case score you:
The ability to pay with your phone anywhere Apple Pay is accepted
A fingerprint reader
A camera that is much, much better
A larger screen
A better screen
A much faster processor
One to two more years of good use out of a phone that supports new operating systems
Now which phone makes sense to purchase?
Rule #3: Only use AT&T ‘Next’ if you want to pay full price for the phone.
AT&T released their ‘Next’ program in 2013. It allows customers to pay an extra $20-$30 per month depending on what model of phone they purchase to upgrade once every year (or every 18-months in some cases).
This isn’t a terrible deal, especially if your employer pays your cell phone bill. However, you are going to pay full price (or close to full price) for the phone you’re buying with an early upgrade.
In most cases, it’s not much different from buying an unlocked phone from T-Mobile, and if you only count the amount AT&T is charging you extra, it can be a better deal. However, you are still paying more for your cell service than you would at T-Mobile, so AT&T will ultimately take more of your money.
Rule #4: Sell your old phone.
I cannot tell you how many times I run into people who tell me they still have old iPhones sitting in a desk drawer at home. Sure, a first-generation iPhone will become a collector’s item in a few decades, but what do you need that 3GS for? Does it possess a certain aesthetic you like to look at from time-to-time? Does its lack of HSDPA+ & LTE inspire you to be something better than yourself? Of course not. You just never sold it on eBay or mailed it to Gazelle. This harkens back to earlier when you were throwing money into a fire while buying a new phone in June.
Do yourself a favor. List your phone on eBay or go here and sell your phone. You can currently pull about $240 from Gazelle on a working 5S. On eBay, the number is a little bit higher, but you have to go through the trouble of waiting on the auction, getting the address, making sure the customer pays, etc.
So the next time your friend tells you they are thinking about buying a new iPhone in mid-August before the new model is announced, do them a favor. Send them a link to this post. Help them become a smarter consumer.