How Buying a Cell Phone Outright Can Save You Hundreds!

In today’s society it’s essentially a necessity to have a cell phone.  Sure, it is possible, to do without, but with everyone having one, you’re liable to miss out on so much if you choose to go without one.  While the spending may seem counterintuitive, this post outlines a way to lessen the costs of having a cell phone without having to make any sacrifices like cutting the data portion of your plan.

How can spending an extra ~$500 help you save money?  The motivation to sign up for a standard 2-year agreement, through any cellular service provider (Rogers, Telus, Bell, Fido, etc.), is to either get your phone for free or to get that ~$500 discount towards your new phone.  The thing is, the cellular service providers end up paying for your phone, and they charge you a healthy premium for it.  In most cases, you are only eligible for the most expensive monthly plans, while customers who own their own phone are able to get the same plan features but at a discounted rate.  At the end of the 2-year term, you end up paying more for your phone costs, than if you had bought the phone outright yourself.  

If you buy the phone outright, there are two service providers that seem to give you a better deal than others.  They are Fido (a subsidiary of Rogers) and Public Mobile (a subsidiary of Telus).  With Fido, you are on the same network and receive the same reception as if you were a Rogers customer, and Public Mobile subscribers get the same reception, being on the same network as Telus customers.  

Let’s say you’re looking at buying the new Apple iPhone 8 and look at the 2-year costs of buying the phone outright vs. on a 2-year agreement with Fido, assuming that you’re looking for a monthly plan with a minimum of 1GB data.  Note: the following prices quoted here have been taken from Apple Canada and Fido in mid-February 2018.

2-year costs of having an iPhone 8

How Much can you save?

Fido: 2-Year Agreement

On a 2-year agreement, your iPhone 8 would cost $429, while your monthly plan costing $95 would include Unlimited Talk and Text, and 1GB data.  Over two years, your total costs would be:

Fido: Outright Purchase

If you bought your phone outright, it would cost you $929.  However, this would qualify you for Fido’s “bring your own phone plans”.  For $65/month, you could get a plan with features identical to the one quoted above (Unlimited Talk and Text, and 1GB data).  Over two years, your costs would be:

Your savings over two years are $220 plus taxes.  You’re not sacrificing features on your plan and you’re not sacrificing on the phone that you’re using.  The cost of saving this $220 is the extra $500 cost of buying your phone outright.

Public Mobile: Outright Purchase

Public Mobile seems to be the cheapest option out there for us right now, that doesn’t force you to sacrifice network connectivity or reception.  If you were to buy your phone outright, Public Mobile would be your cheapest option.  Essentially, you would be on the Telus network, but for $45/month, you can get Unlimited Talk and Text, and 2GB of data at 4G LTE speeds.  Your 2-year costs would be $2009.

Compared to buying your iPhone on a two-year agreement with Fido, you would save $700 over the two years!  Public Mobile offers further discounts too.  If you sign up with a pre-authorized credit or debit, you save an extra $2 a month.  Further, in after being a customer for 1-year, your bill goes down an extra $1 a month too.  This alone could net you an extra $60 as well ($2/month for 24 months is $48 + the extra $1 a month for the months 13-24).  Public Mobile rewards loyalty, offering a $1 discount per month, for every year you’ve been an active customer, up to a maximum of $5 a month.  They also reward referrals of $1 per active customer that you have referred them.  So with Public Mobile, you have opportunities to increase your savings even more!

At the end of the day, cell phone service in Canada is quite expensive.  That being said, if you have enough money to buy your phone outright, you can potentially save yourself a fair bit of money.  I sure have!

There is one more benefit of buying your phone outright, is that you can keep your plan for years.  Every couple years, it seems that cell phone plans have been getting more and more expensive.  Every time that you upgrade though, you end up having to pay the current market prices.  Assuming you’re on a plan that gives you enough features, and you continue to buy your phone outright, you could end up with a plan that is no longer offered, and is below current market prices.

My Take:

A lot depends on the phone that you’re using or thinking about purchasing, but you can afford to buy the phone you’re looking at outright, you can’t afford not to do it!  For different phones and different phone plans, the savings or costs can vary so you should run your own calculations to see what your savings would be.  Use my calculator to find out!

Regardless of whether you buy your phone outright or on a tab, the month after you finish paying off your tab, you should see what your providers ‘Bring Your Own Phone’ rates are.  In my experience, you can often move to a cheaper plan without giving up any features!  In this scenario, if you’d bought the iPhone 8 on a tab, in the third year you could be saving $30/month by changing to the BYOP plan without giving up any features.

With the ‘Bring Your Own Phone’ plans being the cheapest, by using your phone for longer than 2-years so that you can maximize the number of years on BYOP plans and average-down the cost of your device.



2 thoughts on “How Buying a Cell Phone Outright Can Save You Hundreds!”

  1. I really like your website. I like to save money too. And I have some more thoughts on how you can save money with cellphones. I have to say that one of my pet peeves is how much you have to pay for cellphone plans with data so I don’t have data on my plan. Being a baby boomer, it took me a while to get a cellphone. When I did, it was simple flip phone and I had a pay as you go plan($10/month with Telus). It was only about 3 years ago that I graduated to an android phone (a Samsung galaxy) because the price was right – $80. I still had my $10/month plan but had added the $5/month texting which gave me 250 outgoing text messages and unlimited coming in but I couldn’t receive pictures and I could not see texts that were sent to multiple people. I just graduated to an iphone 9 months ago because the price was right – $100 -it is of course a used Iphone 5S. What is special about the iphone is that with imessage, I can now see pictures with texts when I am on wifi and can see texts with multiple recipients with wifi. And you can facetime with other iphone users which is a big bonus. But I still pay only $15.50 a month for my cellphone plan. I must add though that I have Shaw internet at home and there are so many ShawOpen sites and free wifi available everywhere that I don’t miss it.

    1. Thank you for your comment! In the last ten years, we’ve seen the monthly plans for cell phones skyrocket! Around 2007 or so, before data was standard, I remember having a cell phone plan for ~$35 that seemed like it was far more than I could ever use.

      The way the market is setup now, I think it’s imperative that you own your phone. It allows you to pick the plan that fits your needs best (as you’ve done), at rates that are far more reasonable than if you’re on a contract and got a phone for “free” from your cellular provider. As I see it, spending that money on a phone allows you to save significantly on your monthly costs, and will most often save you money in the long run.
      You’ve optimized this even more by buying used cell phones. One problem with a used cell phone is that the battery capacity is typically less. Apple is now offering battery replacements for around $80, so if you’re finding that your battery isn’t lasting you through an entire day, that would be a way to maintain your low costs without having to find a new phone.
      WiFi hotspots are definitely more plentiful than they were even 5 years ago, and definitely make it easier to go without data (or with minimal data), especially if you’re in a metropolitan city or spend most of your time in areas with high commercial density!

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