If you’re planning to pick up the Nexus 4 and don’t mind getting locked into a 2-year contract, there is a way you can pick up the latest Nexus handset for FREE. You might even get a little bit of spending money for your troubles too. Carriers offer a subsidized phone in exchange for a two-year commitment. They do not do this out of the kindness of their hearts. They do this because it’s a smart business decision. Perhaps it’s time more consumers make equally smart business decisions regarding mobile devices and service contracts. For some that might mean opting for a pre-paid service and seeing a substantial savings over a subsidized phone and two-year contract, but if you want to play ball with the major carriers this strategy might be the ticket for the free Google lunch you’ve been waiting for.
Making the smart business decision when selecting your subsidized phone means getting the most money for your commitment. For most carriers that still means iPhone. The AT&T 16GB iPhone 5 has a subsidized price of $199. It sells on eBay for about $700 to $900. If we put the value of the iPhone at $800 then you can look at it as AT&T is paying you $600 for your two-year commitment. The 16GB Nexus 4 on T-Mobile will also sell for the subsidized price $199. You’ll soon be able to buy it from the Google Play Store for $349. Accepting this subsidized phone means you’re accepting a $150 payoff. Does that sound like a smart business decision?
Hit the break to see how to best take advantage of the phone subsidy model and grab a free Nexus 4 and possibly have some cash left over for some accessories.
You’ll need to identify what subsidized phone offers the biggest return. The iPhone 5 has been out for a month and a half and is still hard to get in some markets. Its scarcity may explain the reason for its high resell value. The Samsung Galaxy Note II might be your next best bet if your on AT&T, and if you’re on T-Mobile, it’s definitely your best bet. Next you’ll need to determine what phone you actually want to end up with. The Nexus 4′s bargain price of $349 makes it an ideal candidate. You can follow the steps in any order. Some of you might want to start with dessert and get your hands on the Android 4.2 wielding Nexus first, while others might want to see a little of that green flow back into your pocket before shelling out more cash.
Step 1 – Buy the phone with the biggest payback. Our Example will be the iPhone 5 on contract for $199.
Step 2 – Sell that phone (eBay, Craigslist, your friend at the office…).
Step 3 – Let’s say you sell the iPhone to a friend for $600. Subtract your initial investment and you’re looking at a $400 profit which you can then invest in a brand new, shiny Nexus Quatro.
As we said earlier, you will typically pay more over two years with a subsidized phone rather than going with a pre-paid offering by one of the MVNOs (Mobile Virtual Network Operators). The subsidized phone model, however, works well for those with several lines in a family plan. Moving several lines from a family plan to individual pre-paid lines does not usually bring a huge savings. Some may also choose to stick with their carrier if they value the better customer service experience or want access to an LTE network.
You should also keep in mind that buying a subsidized phone on AT&T and Verizon may force you to select a new plan if you’re grandfathered in to an unlimited data plan. By now most people have learned to live with the tiered data structure but it’s still a concern for some.
When it comes to mobile, everyone is in a different situation and what makes sense for one person might not make sense for someone else. Maximizing your subsidy is a concept that can save you a considerable amount of money if you plan to stick with a carrier for at least the next two years. We focused on getting the Nexus 4 on AT&T or T-Mobile which is the best bang for the buck, but this concept is applicable to other phones as well as Verizon and Sprint customers. Let us know if you go this route and how you make out.