The Hidden Figures That Make Your iPhone Affordable

• Apple
• iPhone

While the cost of a top-tier iPhone continues to climb, most people, particularly in America, are paying less. Thanks to promotional discounts and other financial incentives offered by the three major mobile providers in the United States, a typical American has been paying nearly $400 less than the list price for a top-tier iPhone. This analysis by BayStreet Research is a testament to the unappreciated role of mobile providers in making smartphones affordable and widespread.

Smartphone Affordability: A Historical Overview

In 2017, Apple started selling the first iPhone model with a starting price of nearly $1,000 in the United States. Samsung phone prices also hit four digits around the same time. The starting price of the highest-end iPhone reached $1,100 in 2018. With the arrival of the iPhone 15 Pro Max announced last week, the top-tier iPhone now starts at $1,200. However, most Americans need to pay closer to these sticker prices.

How Do Mobile Providers Make iPhones Affordable?

Mobile providers like AT&T, T-Mobile, and Verizon have offered increasingly generous promotions over the past few years, especially if you trade in an older iPhone and are on a higher-cost mobile data plan. Essentially, these providers pay Apple the total price for an iPhone and absorb the average $372 discount. They make back part of that discount by reselling the phone you trade in and hope to make back more money if you stick with their phone service for years.

Industry experts suggest that Apple also contributes to these device discounts. Buying a new phone from your mobile provider will spread out your cost of a new iPhone over potentially dozens of monthly bills, making it a no-interest loan.

What’s the Catch?

While these discounts make iPhones cheaper and even more affordable, they may not always be the best deal for you. The free or reduced-price iPhones often come with a catch. You need to stick with their phone service for years to make the deal worthwhile for the mobile providers. However, as a telecom industry analyst with MoffettNathanson Research, Craig Moffett warns that these hot deals on new iPhones won’t last forever. For now, though, consumers, phone companies, and Apple are all winning.