The iPhone 6 and iPhone 6 Plus officially hit store shelves tomorrow, and consumers have already been shelling out their hard-earned cash to preorder one of them. Apple Inc. (NASDAQ:AAPL)’s website states that the iPhone 6 is priced at $199, $299 or $399, depending on the amount of storage it has, with a two-year contract with U.S. carriers.
However, one author says the price is actually a lot more, even accusing Apple of “deceptive advertising.”
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Why the iPhone 6 actually costs more
Writing on ZDNet, Ed Bott notes that the advertised prices are indeed the upfront amount buyers pay when they begin a new two-year contract. “But those apparently low subsidized prices include hidden costs that jack the price up over time,” he adds.
Of course the actual price consumers will pay for an iPhone 6 depends on which carrier they select. Bott noted that the rules and carrier offerings have changed a lot over the last couple of years. He also said that often it’s possible find a better deal off-contract.
A breakdown of the iPhone 6 pricing
Bott calls the reported price tag of $200 for the 16 GB model a “down payment,” noting that carriers pay a $450 subsidy for their subscribers to be able to have the device. But do carriers really just give money away to attract subscribers? Of course not. He said they have different ways of recovering their subsidy, sometimes even charging subscribers hundreds of dollars over what they would have paid if they had just bought the device.
After selecting a device, consumers have to choose a monthly plan and pay the monthly price for two years. He adds that for the three top carriers in the U.S., contract plans have “significantly higher” prices than those consumers pay if they either buy the iPhone 6 outright or otherwise finance the total retail price.
Where the extra costs come from
The author suggests that iPhone 6 buyers with AT&T Inc. (NYSE:T) will pay between $560 and $800 for a 16 GB model, while Sprint Corporation (NYSE:S) will pay between $680 and $920 for the same phone. He suggests that Verizon Communications Inc. (NYSE:VZ) customers will pay between $470 and $830, while T-Mobile US Inc (NYSE:TMUS) customers will pay a flat $660. That’s compared to the regular retail price of $650 for the 16 GB iPhone 6.
He notes that all carriers offer options to outright buy it or finance it over 20 to 24 months. On the other hand, there are other plans for those who chose the two-year contract route. So at Verizon or AT&T, customers who finance their phones or just pay the full price for them get per-line discounts on their monthly mobile service plans.
However, those who take the two-year contract route don’t get those discounts. In other words, you’re paying the entire price for that iPhone 6 and maybe more, whether you like it or not.