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Question

The True Cost of a SmartPhone (Iphone6)

  • 16 September 2014
  • 18 replies
  • 61 views

Userlevel 3
I have read a lot of comments about Koodo and other carriers that are charging too much for Smart phones. The latest comments have been focused on the iPhone6. I'm going to offer a reality check. First Some Facts: Our Federal government on behalf of its citizens ended the practice of 3 year contracts. This limited the amount of subsidy that can be provided. The Subsidy (the amount discounted) is now spread over a maximum of two years. This was not a Koodo decision, it was us, through our elected officials. As the features get better, the cost of smart phones is going up, not down. Also our Canadian dollar is down and this will add about 10% to the cost of the phone in comparison to a year or ago. The markup on electronics (Phones, TVs, MP3 players etc.) is minimal when compared to household products and clothing. 25% would be the high level for markup. This does not leave room to bury any part of a subsidy. Now the Math: Iphone 6 (4.7", 16GB) Price: $749 Lets Spread this over the 24 Months: $31.21 Based on this, do you think is is realistic to provide a free iPhone6 on a $40 Plan? (somebody was asking) Lets look at the TAB LARGE Math Tab Large get you $500 off of a Smartphone. As per our government interference, that must be paid back over the 24 months, MAX!. That's $20.83 per month to repay our debt. Yes, debt! I say this because all you are doing is financing your Smartphone I'll use the $75 plan as the example here: TAB LARGE $75 + $10 for the Large Tab = $85 If you deduct the cost of the Large Tab Subsidy of $20.83 per month, the cost of this plan is now $64.17 You Pay $249 for the Iphone6, plus $500 through your plan over 2 years, Plus you have to PAY to get your phone unlocked so you can roam economically. Your Plan and iPhone cost you: 24 x $85+hst = $2305.20 iPhone6 on the Large Tab+Hst=$281.37 Cost to Unlock iPhone: $35+HST= $39.55 Total Cost of iPhone and Koodo Service: $2626.12 OR You could buy your own Iphone6 from the Apple Store (Unlocked), pick whatever plan suites you from any carrier (I suggest Koodo 🙂 ) $749+hst=$846.37 The current Monthly Plan that is comparable (I think exact) as the $75/$85 is the $60 Plan If you bring your own device, Koodo will give you a "No TAB Discount" of 10% off your monthly plan, now we are at $54. Your Total cost over 2 Years: 24 x $54+hst =$1464.48 iPhone6+hst=$846.37 Total Cost of Iphone and Koodo Service: $2310.85 If you can't see the math yet, let me spell it out. The total cost of "financing" your new IPhone6 is $315.27 or $13.14 per month Why would you want to purchase your iPhone from Koodo, Fido, Telus or any carrier? Do you like paying ~30% Interest? Go to the Apple Store and get an Unlocked Iphone6. get the best support Apple with provided because you bought it from them. This is the REAL Cost of owning and using a Wireless SmartPhone. What our Government has done it made you more aware of the costs and ensured you were paying for them. This became a little more details than I planned, but hope it helps people undertsand a little better.

18 replies

Userlevel 6
Not everyone has the funds to purchase a phone outright. Personally I think it's worth saving so you do, however, that's definitely not the standard.
Userlevel 3
Not everyone has the funds to purchase a phone outright. Personally I think it's worth saving so...John, I agree. We all need to understand the cost we are incurring when we choose the "Finance" Option.
Userlevel 6
Not everyone has the funds to purchase a phone outright. Personally I think it's worth saving so...[i]Not everyone has the funds to purchase a phone outright. In that case, no new iPhone. Simple as that, as is the case with everything else in life that we can't afford. I don't have a Ferrari (or any other brand new car) even though I'd love to. People need to stop depending on credit. Only 2 things are worth going into debt for: housing and tuition. Nothing else. Anything that anyone buys on credit is purely for instant gratification (which further drowns us into debt).
Userlevel 7
Badge +4
Not everyone has the funds to purchase a phone outright. Personally I think it's worth saving so...What about a low interest loan to pursue an investment that will appreciate and result in a profit higher than the cost of the loan 😉
Userlevel 6
Not everyone has the funds to purchase a phone outright. Personally I think it's worth saving so...There are always exceptions..... like this, and rule 34 :oP
Userlevel 7
Badge +4
Note that HST in the above is 13%
Userlevel 3
Note that HST in the above is 13%Yes, I'm in Ontario so I used 13%.
Userlevel 3
Another alternative to buying your phone from Apple is to buy the phone from Koodo on a lower tab (usually Tab M). Yes, you pay more for your phone upfront, so your argument still holds that getting Tab L is basically financing your phone with a relatively high interest rate. Personally I would not be sorry if Tab L was removed as an option, but as John mentions, some people really want a lower cost phone even if it means they pay more for it (irony?).
Userlevel 3
Another alternative to buying your phone from Apple is to buy the phone from Koodo on a lower tab...Moon,, Good point. I was going to do the math on the small or medium tabs. It was a little long winded as it was. You should always consider the unlock charge because the iPhone is worth more unlocked (Resale value) than if it is locked. You will get more than your $35 back when you sell it. Although I do not understand why there is any charge to unlock a phone that is fully owned and no longer has a tab owing. JY
Userlevel 7
Badge +4
Another alternative to buying your phone from Apple is to buy the phone from Koodo on a lower tab...Regarding the last point, the CRTC noted that there was enough competition in the marketplace to warrant a charge (not regulated) to unlock phones for a fee. Now I wonder what the Fed & Prov would think if we tell them that unlocks via website loses them sales tax dollars since you cant impose duty on services received virtually
Userlevel 3
Another alternative to buying your phone from Apple is to buy the phone from Koodo on a lower tab...LOL Dennis! That may get their attention. If I walk into the Koodo Kiosk and buy my Iphone6 Outright, why should it be locked in the first place?
Userlevel 3
I should also clarify the TAB contribution. "Large Tab Subsidy of $20.83 per month, the cost of this plan is now $64.17" I simply divided the $500 over 24 month to get the $20.83 You could also look at it this way: 15% of 75 = $11.25 The +$10 for the Large Tab = $10 Total TAB Value Monthly is $21.25 So there is an extra $0.42 per month available to subsidize the Iphone6. Koodo could decide to charge less than the $249 on a Large Tab, this is just an assumption at this point.
Userlevel 7
Badge +4
I should also clarify the TAB contribution. "Large Tab Subsidy of $20.83 per month, the cost o...They could. They have definitely charged less for an iphone on a Tab Medium
Userlevel 7
Badge +4
Ironically, the people that should read this are the 1st ones to skip it because SHINY NEW PHONE!!!!
Userlevel 3
Ironically, the people that should read this are the 1st ones to skip it because SHINY NEW PHONE!!!!Squirrel!!!
Userlevel 3
Ironically, the people that should read this are the 1st ones to skip it because SHINY NEW PHONE!!!!Yes, but is it a shiny new squirrel?
Userlevel 2
That's kind of funny. Of course you need to pay for the service you're getting over the two year span. The cost of the phone isn't really built into the plan cost, unless you have a tab charge. Any company needs to make a profit on products and services. I'm sure they get a good price on devices, but they also maintain the company's towers, call centres, stores, and all administrative costs. All prices are based on cost of business and profitability. Koodo gives you a $0 device in most cases and needs to make that money back some way or another, such as tab charges and tab large plans for higher priced devices. Just some food for thought...

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