Cell Phones

# Locked: Proper Calculation of Having a phone on contract vs outright

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• Jul 4th, 2016 2:50 pm
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[OP]
Deal Expert
Jun 15, 2011
43889 posts

## Proper Calculation of Having a phone on contract vs outright

So I know there's been discussions where people prefer to sign up for a contract vs buying a phone outright, and that it works out to be cheaper either way. That being said, what is the exact calculation to use? I.e. to know if its cost effective in getting a phone on contract or outright?

Edit: This is a corporate plan. Plan is same regardless of contract or no contract. Contract term is 36 months vs 24 months.

Example - I shall use the iPhone SE (5SE) 16GB as an example.

a) Contract option

Plan - \$40 voice + \$10 data (unlimited with 10GB fair usage policy - flex rate). Max \$56.50 taxes in a month
Contract term - 36 months
Contract price - \$99 + taxes

Would the calculation be: \$111.87 (for phone \$99 + taxes) + \$2034 (\$56.50 x 36 months) = \$2145.87 total cost of phone + monthly plan for length of 36 month term?

b) Outright option:

Plan - \$40 voice + \$10 data (unlimited with 10GB fair usage policy - flex rate). Max \$56.50 taxes in a month
Outright price - \$579 + taxes
Usage of phone non contract - Say lets say we use the phone for 36 months - Or does this not apply when calculating it?

Would the calculation be: \$654.27 (for phone \$579 + taxes) + \$2034 (\$56.50 x 36 months) = \$2688.27

Therefore its cheaper to get the phone on contract?

Pros of no contract - factory unlocked iPhone - can use when traveling. Can leave Rogers if needed without any cancellation fees, etc.

Thanks
Blanka
17 replies
Feb 14, 2016
1832 posts
Monthly fee cannot be same between contract option vs outright option;
contract option is always more expensive;
Monthly saving achieved by paying cheaper monthly plan offsets the outright cost in 2 years + getting unlocked phone etc

usually same plan (data, minutes) for BYOP and contract price differ by around 30-40 bucks at least; so (\$30 savings per month x 24 = 720 savings total)
So leaving everything same, add 30 bucks to your contract calculation, and that should be about right

rogers minimum plan for contract is 80;
[OP]
Deal Expert
Jun 15, 2011
43889 posts
JIB9022 wrote: Monthly fee cannot be same between contract option vs outright option;
contract option is always more expensive;
Monthly saving achieved by paying cheaper monthly plan offsets the outright cost in 2 years + getting unlocked phone etc

usually same plan (data, minutes) for BYOP and contract price differ by around 30-40 bucks at least; so (\$30 savings per month x 24 = 720 savings total)
So leaving everything same, add 30 bucks to your contract calculation, and that should be about right
Not with my Corporate plan. Monthly fee is same regardless of contract or no contract/month to month/if bringing my own phone.
Blanka
Deal Fanatic
Jan 31, 2006
7725 posts
Toronto
djemzine wrote: Not with my Corporate plan. Monthly fee is same regardless of contract or no contract/month to month/if bringing my own phone.
You should have mention that you are on a corporate plan. But to someone who does not have a corporate plan option the monthly fees usually start \$60 to \$80
[OP]
Deal Expert
Jun 15, 2011
43889 posts
cgtlky wrote: You should have mention that you are on a corporate plan. But to someone who does not have a corporate plan option the monthly fees usually start \$60 to \$80
I know, I forgot lol. I edited my post.

I just wanted to know if the calculations I factored in to see which option would be cheaper.
Blanka
Jr. Member
Apr 21, 2016
137 posts
djemzine wrote: Not with my Corporate plan. Monthly fee is same regardless of contract or no contract/month to month/if bringing my own phone.
edit: NVM

If you still have the same plan in both options, at the same price. Taking the subsidy will definitely be cheaper.

-Unless you are planning on travelling within the next three months. You can always unlock the phone anytime after 3 months with Rogers for \$56.50
-So the downside is not being able to leave unless you pay cancellation fees. But that should just be paying off the device? Unless corp plan agreements are different.
Deal Guru
Nov 19, 2010
14709 posts
Toronto
Your calculation is correct. By taking the contract you effectively gain \$13.33/month in hardware subsidies which means you're effectively paying ~\$37/month (before taxes) for your plan.
[OP]
Deal Expert
Jun 15, 2011
43889 posts
wilsonlam97 wrote: Your calculation is correct. By taking the contract you effectively gain \$13.33/month in hardware subsidies which means you're effectively paying ~\$37/month (before taxes) for your plan.
Thanks for confirming!
Blanka
Deal Expert
Dec 12, 2009
23999 posts
Toronto
Tell me you didn't start this thread to incite jealousy? Definitely take the offer of cheap hardware. The freedom to not be tied down to a contract only matters if there were true options to defect to within the next 36 months. What's the likelihood of finding a carrier that will offer a 10 gig plan for less than \$56.50? A lottery win in this Friday's lotto max draw is more likely, lol.
Deal Expert
Nov 15, 2004
20200 posts
Toronto
The carrier doesn't offer a BYOD discount for using your own hardware? If that's the case it's better to accept their subsidized device as you're paying for it either way.
[OP]
Deal Expert
Jun 15, 2011
43889 posts
will888 wrote: Tell me you didn't start this thread to incite jealousy? Definitely take the offer of cheap hardware. The freedom to not be tied down to a contract only matters if there were true options to defect to within the next 36 months. What's the likelihood of finding a carrier that will offer a 10 gig plan for less than \$56.50? A lottery win in this Friday's lotto max draw is more likely, lol.
I swear - it was not meant for inciting jealousy lol. I was just curious, as I've seen various threads or posts about contract vs no contract pricing, benefits, etc.
Piro21 wrote: The carrier doesn't offer a BYOD discount for using your own hardware? If that's the case it's better to accept their subsidized device as you're paying for it either way.
Nope, the price plan is the same for BYOD or signing up on a contract. Currently the three lines are on BYOD.
Blanka
Deal Expert
Nov 28, 2013
20612 posts
Oakville
JIB9022 wrote: Monthly fee cannot be same between contract option vs outright option;
contract option is always more expensive;
Monthly saving achieved by paying cheaper monthly plan offsets the outright cost in 2 years + getting unlocked phone etc

usually same plan (data, minutes) for BYOP and contract price differ by around 30-40 bucks at least; so (\$30 savings per month x 24 = 720 savings total)
So leaving everything same, add 30 bucks to your contract calculation, and that should be about right

rogers minimum plan for contract is 80;
Actually... Rogers BYOD prices are the same as their smart tab prices these days.
will888 wrote: Tell me you didn't start this thread to incite jealousy? Definitely take the offer of cheap hardware. The freedom to not be tied down to a contract only matters if there were true options to defect to within the next 36 months. What's the likelihood of finding a carrier that will offer a 10 gig plan for less than \$56.50? A lottery win in this Friday's lotto max draw is more likely, lol.
Presuming the 10GB is full speed, yeah, this is smokin' hot. The next closest option is the Rogers Saskatchewan plan, \$65 before tax for 10GB (\$60 if you don't need Canada-wide calling) - and you obviously get stuck with a Sask number.
Deal Expert
Jul 5, 2004
26369 posts
In your case it's a no brainer. Where people screw up is constantly signing a new term just to get a cheap phone. They keep getting worse plans for more money, often only \$5 or \$10 more, but that adds up over the years. I have a great plan for \$50 that I've been on for a long time and will be until Rogers refuses to let me keep it. Those who are currently on crappy plans for \$70+ per month have no one to blame but themselves. The savings of no contract vs contract aren't about the present, it's about the long term outlook. Most people had very good plans once upon a time, but they gave it up all to get a "cheap" iPhone or Samsung. In the end, they paid for the phone and are still paying for it, considering they'll never again get their cheap plans back.

A good plan is more important than a cheap phone. There's lots of options for phones out there, but once you lose a good plan, it's gone forever. People need to buy phones they can afford. If you have to "upgrade" to a worse, yet more expensive plan to get that phone you want, it clearly means you can't afford the phone. If you can't afford to pay for it outright, don't get it!
Deal Expert
Nov 28, 2013
20612 posts
Oakville
Shaner wrote: Most people had very good plans once upon a time, but they gave it up all to get a "cheap" iPhone or Samsung.
Part of the problem lies in the fact that those "very good plans" from once upon a time felt very much like overkill. "6GB a month for \$30? But I've never used more than 750MB! And the vast majority of my phone usage is phone calls and text messages, and I can't get unlimited texts/minutes unless I bump up to a more expensive/less data plan!" - most people I know ended up spending less money monthly for their plans when they changed away from the awesome old data plans (because of no more overage charges, etc), even though *today* they would be saving more money (thanks to things like WhatsApp/Viber/whatever). And once they switched away from the 6GB data to 1GB data plans, if they wanted to bump up data plans after that they always got boned into paying for newer crappier plans. Very few people did a good job of predicting how much mobile data they'd actually want to be using 5 years down the road.

Add in to that the deceptive tactics used by the big 3 for years - where even if you tried to buy a phone outright from them, they still told you that you *had* to change your plan... And buying a phone outright was much more difficult than it is now... And it's no surprise we're in the position we are now.
Deal Expert
Dec 12, 2009
23999 posts
Toronto
djemzine wrote: I swear - it was not meant for inciting jealousy lol. I was just curious, as I've seen various threads or posts about contract vs no contract pricing, benefits, etc.
I am just kidding about inciting jealousy, although I am admittedly very jealous.
Aug 20, 2008
2065 posts
That's not at all how you calculate the cost. You start by looking at your usage (text,voice,data) then finding the cheapest option that covers your needs (you can ask about it here too, people are very resourceful). Then you multiply the monthly cost by the number of months in your contract. You add the price of the phone (cheapest price, not the provider retail price, again you need to look for deals). Ideally you should be choosing the phone based on your needs also, but for simplicity let's assume only the one phone you mentioned meets your needs. That's the final number you compare to the total contract cost.

What's the point in having unlimited talk if you only talk 100 minutes a month and having 6GB data when your average usage is 1GB? That's why you always need to start from your usage pattern, not from the plan you are offered.
Sr. Member
Sep 9, 2014
604 posts