Buying the iPhone 4S, SIM free

Posted by nkbish0p at 18:16

Tweet Long time readers of this blog will probably be aware that when it comes to buying a new iPhone, my preferred method is to buy an unlocked handset direct from Apple and put my own SIM card in it. This gives several benefits and I always encourage others to do the same

Pros:

• Usually works out cheaper over the duration of a 24 month contract.
• Flexibility, SIM only deals usually allow you to change plan before the 24 month period is up.
• iPhones bought from the UK Apple website come unlocked, increasing their resale value and allowing you to use them with a local SIM abroad.

The thing that puts most people off doing this however is the upfront cost. With the most basic iPhone 4S (the 16gb model) costing £499 from the apple website, many people wrongly consider a contract from a UK network to offer better value, or are put off by the high initial cost.

To prove my theory, I am going to compare my recommended way of buying the iPhone 4S with the "standard" way, getting it on a 2 year contract with a major network.

I am going to start by looking at contracts offering 600 minutes, a pretty average figure and a contract that many people sign up for. I am going to start by looking at Vodafone, the biggest UK network.

Firstly, the Vodafone offer seems alright, for £36p/m you can get 600 minutes, unlimited texts and 500mb data per month and only have to pay £159 upfront for a 16gb handset. But the deal is actually even better. If you pre-order now, Vodafone are offering £59 cashback which they will credit to your account in November. For the next 7 days, Quidco will also give you £40 cashback if you order an iPhone 4S.

So lets do the maths:

Upfront cost = £159

Contract cost = 24 x £36 = £864

Cashback = £59 + £40 = £99

Total cost over 24 months = £924

Now, to go the "non-contract route", a 16gb iPhone 4S from apple will cost £499.

£924 - £499 = £425

£425/24 = £17.71

So, if we can find a SIM only contract, for less than £17.71 per month, this will work out better value.

And this is easy.

Firstly, just looking at Vodafone's website, a 12 month SIM only contract offering 600 minutes, 3000 texts and 500mb internet costs £20.50 per month. Currently Quidco are offering £100 cash-back for this offer from Vodafone.  Let's assume this deal will still be available next year, which it almost certainly will, allowing the cash-back reward to be collected twice, if a new SIM is purchased next summer, once now and once in twelve months time.

£20.50 x 24 = £492

£100 x 2 = £200

Total cost of contract = £292

Cost of contract plus phone = £791

So, to recap, buying the iPhone 4S, on a 24 month contract with Vodafone will cost you £924 over 2 years. Buying the (unlocked!) handset from apple and using a Vodafone SIM offering the same deal will cost you only £791. Thats a saving of £133! It should also be remembered that the Vodafone contract includes £59 cash-back for making a pre-order, so unless you buy quickly, the actual cost of the contract would be £983 and the difference would go up to £192!

Now, we can look at this in different ways. You could choose to keep the £133 as a saving, you could buy a SIM only deal offering 900 minutes (and £120 cash-back) to give a roughly similar cost over 24 months as buying the phone with 600 minutes per month on contract, or you could go a third route which is the one I consider to be the most appealing.

A 32gb iPhone 4S retails from apple at £599 (which sounds horrendous and in my opinion is far too much for a mobile phone). But, with the saving of £133, you could purchase a 32gb iPhone 4S instead of a 16gb model and still save £33 compared to if you had bought the 16gb model on a 24 month contract with Vodafone. Tempting!

In summary, buying a phone on a contract is like purchasing something on a credit card. If you can't afford the cost of something, with a contract, a network is "lending" you the money to purchase the phone and allowing you to pay it back in "instalments" over the duration of your contract. This will always result in you paying back more than if you had paid for the phone yourself, upfront.

I have bought both my iPhone 3g and my iPhone 4 using this method and if you can stomach the high upfront costs associated with it, I would advise you to do the same!

I'll finish by posting the following, which demonstrates that the theory holds for any type of contract, from any network! This compares the cheapest contract available with each number of minutes to a SIM only offer that includes the same number of minutes. The SIM only offers are cheaper every time!