So you’re debating whether or not to take the plunge and buy an iPhone 5. If you’re like most iPhone users, you’re already in a contract, which you signed probably about a year ago when the iPhone 4s came out. One option is to sign a new contract and receive what is commonly known as an early upgrade discount. Sadly, that discount pails in comparison to a full upgrade discount, which drops the price of the 16GB iPhone 5 to $200 (plus tax).
In my case I recently bought a new iPhone 5 and wasn’t eligible for a full equipment renewal, resulting in me paying $510 including tax for the iPhone 5 – a partial discount for customer loyalty and being in proximity of my contract renewal. Nevertheless, it’s hardly worth it when you consider the full retail price of the iPhone 5 with tax (here in CA), is $715. Additionally, I’m eligible for a fully subsidized handset as early as March, so assuming I did buy the iPhone 5 at full retail price, I could wait until March to sign a new contract, and sell whatever handset I get at a discount, thus off setting the iPhone 5’s cost.
But there is an alternative to all this. In fact given the math involved, it only makes sense to subscribe to this method, provided you’re comfortable with what might not seem above board tactics, but are well within the legal and contractual confines of your service provider. That said, this applies to Verizon and AT&T, though I’m confident that the same could work for Sprint.
Without further adieu, here is how to get the iPhone 5 for less than full retail price, but effectively not resign a new contract agreement with your service provider. Keep in mind that AT&T is cheaper than Verizon.
- Start a new line of service on your current plan
- This will allow you to get the iPhone 5 at the discounted or subsidized price
- After 14 days, which is your contractual obligation, you cancel that line of service
- You’ll be charged an ETF (early termination fee): $325 for AT&T and $350 for Verizon
- Keep the iPhone 5
- The final price for:
- AT&T: $200+tax+$325+activation fee
- Verizon: $200+tax+$350+activation fee
- Update: Buy it in Nevada or a state without tax and you’ll save more.
Depending on your tax rate, you’ll pay anywhere from $100-150 less than the retail cost, yet won’t be trapped in a 2-year obligation. So it only makes logical, mathmatical sense to purchase an iPhone 5 using the above method. Now, to be completely candid, we reviewed both AT&T and Verizon’s ETF/contract info and neither say anything about a supplementary or additional ETF cost for the iPhone 5. They are posted below: