I saw an interesting report on TmoNews yesterday. Actually, it was a follow-up of another story that appeared on the site, regarding T-Mobile USA's CMO Cole Brodman. If you missed the initial report, or even the follow-up, you should go read them. (The links are highlighted above.) But, basically, Brodman is talking about how phone subsidies aren't all that great, and that we should get rid of them.

He's absolutely right.

To be honest, I was both a little shocked when I saw the comment stream on both of those stories, especially the follow-up article. For as long as I've been in the phone industry, I've never actually talked to someone who would willingly pay the most for a phone out-right. Not in the general consumer, sense, that is. In fact, the majority of people that I have spoken to in the past, especially when I was selling the phones, would be more than willing to wait for their contract to reach its term limit so they could get a discount.

And, let's face it, the wireless carriers have a nice subsidy thing going on here. You can get a steep, steep discount on a phone right out of the gate if you're willing to sign that two-year contract (here in the States). For most people it isn't about the contract. We are so accustomed to contracts, and the simple fact that contracts get you a good deal on a phone. If it's possible for that to change, then it wouldn't be something that could happen overnight.

A smartphone can cost you more than $500 without a contract. But, with the contract, you'll more than likely be able to snag it for only $200. In the case of other devices, some featuring 4G LTE or other high-end features, it may be a bit more. But, not having to pay that huge price tag right from the start, even if you're paying for it in one way or another every month for the length of your contract, is worth it to most customers.

It's pretty clear to me why people don't want to pay the higher cost of the phone, along with signing that contract. It's because the larger wireless carriers don't alter the contract pricing each month. So, even if you pay for the phone outright, you still have to pay the same price as someone who got the phone with a subsidy. As I looked over the comments on that initial story, I realized that people may actually want there to be two different options.

The first would be that subsidy option, where you're paying a set amount every month for your contract, and all your features. What you get today. The second option would be the ability to pay for your phone outright, but pay a lesser amount every month. There should be no surprise that the wireless carriers make money on just about every part of the subsidy, so as long as you buy the phone from the carrier, offering a lesser amount per month would make sense.

But like I mentioned above, I don't see a change like that happening. And, even if it did, it would have to be a gradual one. An "extra option" for consumers under Verizon's or AT&T's wing. It works for T-Mobile and their Value Plans, and plenty of people seem to like it. Could it work on the larger networks? I don't see why not, to be honest.

Then again, people could want cheaper phones, with longer contracts.


Don't forget to VOTE! Each week, PhoneDog Fans vote for their #1 smartphone in the Official Smartphone Rankings. Vote now and contribute to the industry's most relevant weekly ranking charts


Related posts



Comments & discussions  

125 Reactions to this post

"Would you pay full retail for a phone?"


Please limit your reaction to 140 characters or use comments for a longer reply :)
Add
Thanks for your participation! :)

Timothy Santoso Catchpole Yeah. I agree. It gives us more flexibility for exchange network.
Sahil Satishkumar Its correct! Thats how it works in India (unfortunately) what you pay 300$ for samsung galaxy note in US people in india have to pay 630$ for the same device.! Even if you are stuck with the carrier for 10 years, you won't be shown any mercy!:'(
BossMan Atl Yes and I did. Paid $649.99 + tax for the AT&T galaxy note to use on T-MOBILE. 2 years is a long time to be over charged by a company.
Susan Hugus That would work for me. I have an unlocked Galaxy Nexus, and would hope more different phones would receive support. I did not like the long waits for new phones to come to US companies.
Anonymous I would, I can pay $500 and $50/month, or $200 and $80 /month, i choose $50/month. It costs less to pay full price.
Joshua Becker Stupid, moronic idea. I am happy paying $200 for a new phone and being in a contract, versus paying 6 or 700$
Anonymous Yes but only if the monthly plan were very cheap and there is only a $50 fee to drop a contract instead of like $300
Scott Sanstad Absolutely. If dropping the subsidies meant that I didn't have a contract and the plan was cheaper, I'd probably end up paying full price for my phone (since you usually end up paying more for the phone on-contract than off contract). That's why I joined T-Mobile. They were the only carrier at the time that gave a discounted no-contract plan.
Amer Ahmed Doesn't the service for prepaid plans always suck? There is a reason they cost less then the two year contract but it would be nice if they brought back the one year contract...
Javier Sanchez Ojeda Hell no ! Smartphones come and go to fast it's hard to keep track besides every two years you can always get the latest and with a discount
Kody Lanes HELL YEA!!! I just paid 704.96$ for my unlocked Samsung Galaxy Note and judging the performance with my sisters at&t branded Note its the best decision I ever made!!! Plus i didnt have to enter a two year contract and she did and we are both new at&t customers. I will never buy a a carrier locked phone again! carriers don't give a shit about us! Why else would they put LTE over the best posible processor available and trust me it makes a difference the at&t note lags and also the wallpaper doesn't even scroll (which I have never seen on an android phone without scrollable wallpaper) and when she called at&t to ask why they patched her through to samsung and samsung explained that it was due to the processor and also because of the inferior processor at&t chose to stick its "american" customers with the at&t note also doesnt shit with the amazing video editor. IS LTE WORTH ALL THAT? AND WHAT'S WORSE IS THEY SEEM TO BE DOING THE SAME THING WITH HTC'S NEW FLAGSHIP THE ONE X! WHILE THE REST OF THE WORLD GETS TO HAVE AN AWESOME QUAD CORE PROCESSOR AT&T CARES MORE ABOUT LTE AND WILL STICK THE SUCKERS THAT ARE ACTUALLY FOOLISH ENOUGH TO GO WITH THEIR VERSION WITH A DUAL CORE I MEAN I'M TIRED OF THIS!!!! WHY DOES IT SEEM LIKE LTE DOESNT WORK WITH ANY OF THE HIGH END PROCESSORS? THIS IS CRAZY! SO UNTIL THIS CARRIERS GET THEIR ACT TOGETHER AND ALLOW TOP OF THE LINE COMPONENTS TO PLAY WELL WITH THEIR PRECIOUS LTE THEN I WILL JUST BE PAYING THE EXTRA COST AND GETTING THE PREFORMANCE THAT THE OEM'S ACTUALLY HAD IN MIND WHEN CREATING THESE DEVICES AND I WOULD ENCOURAGE YOU ALL TO DO THE SAME LETS SPEAK WITH OUR WALLETS AND LET THEM KNOW WE WILL NO LONGER EXCEPT SECOND RATE PRODUCTS AND ALSO THE ADDED BENIFITS OF GETTING UPDATES MUCH FASTER CAN'T FORGET THAT..
Orion Pax As long as...1....no bloatware.......2...discount price on your bill......3....no Carrier logo anywhere on the phone....4...faster updates.
Brent Legendre I think the cell companies would be embarrassed by how expensive there phones really are.
Anthony V Cannata Pay full price better mean unlimited everything yes even data and drop the contract or just stay the way you are.
Jamil Cooper Yes saves money on value plans now
Nathan Parks Only if unlimited plans were around 30 a month.
Jesse Bryant What are these carriers thinking? For an early upgrade to a new phone would be at least $500 that's almost a Damn house payment.
Shawn Towle I would buy a phone at full retail, only if there was no contract and the plans were cheaper. In other words, if this happens I'm going prepaid.
Jonathan Ng Unlocked phones are awesome !
Trevor Lazar YES! people need the freedom of choosing their provider that suits their budget and a device that they want and not just have to settle for
Edward Gonse I think they shouls get rid of subsidized pricing on phones. When you sign a contract your first few bills that you pay are used to pay the phone off anyway. Carriers are losing money because people sign a contract and find out they can't afford the monthly bill so copanies are at a loss when the subscriber bails on their contract without paying an ETF.
Richard Neil Lund Yes of course! I think the first carrier to lease us the latest smartphones will gain a ton new subscribers though. ;-)
Prince Raz hello i bought an evo it broke, i bought a hd2 it went all bank on me hmm i rather buy it second hand from craiglist lol
Bryan West Been there, done that.. Nexus one, Evo 3D, and will probably do it again if sprint gets a good HTC one version.
Simon Yu Already have before for my G2x when I couldn't bear having my Cliq any longer.. going to pay full price again to get a HTC One X if the rumor is true (G4x) if not then I'll wait for the GSIII.
Christopher Jackson Yes if I could get a lower monthly rate
Susan Hugus The price of the phones might even be cheaper since businesses selling the phones would be trying to out do each other to bring in the customer. Wireless companies seen to take forever to bring a phone to market in the US. We are so behind the rest of the world waiting for the new phones that this might speed up the process. Also I would rather have the wireless provider put more money into the company's infrastructure so that the service provides the best conductivity possible. I still wonder how much AT&T had to pay out to Apple rather than up grading their spotty service. My Galaxy Nexus is great!
Bill Thomas Fuck no
Reginald Raynor Yup i sure would
Jared JD Scott depends how good the specs and design of the phone is but mostly prob not
Noemi Hernandez Escareño I think it is a good idea, I've bought unsubsidized phones before and I had no problems, I would prefer for the phone to be unlocked but then I dont think that carriers wous see the point. If they did this, you wouldn't necessarily be able to move when you wanted because you would still be in contract unless both the termination fee and the monthly fees went down. Otherwise it would be just like it is now when you decide to go for a no contract plan. The thing that really irritates me is that you're playing a rediculous amount for such a small subsidy, the carrier gains double, sometimes triple the subsidy cost by overcharging for minutes/data/text messages on a contract you have to pay into for 2 years and then they have the nerve to say that until you are 3/4ths into your plan they'll lower the termanation fee, it's all money and a ripoff, but there are no alternatives. I wish we had a system similar to those in european countries, where I think the subsidy is more worth your while.
Nick Chimento Hell no! Lmao.
Christopher Spratley Full price for a phone so they cab Jack the prices even higher, ill keep my 2 yr contract price.#HellOutaHere#
David DiPilla And phone companies would be makings more money if they would alow customers to buy a new phone everyear but instead you either would wait 2 years or pay full price which is not good
Warren Saunders On the 5th of April my HTC one X, is going to pwn I tell you....it's gonna....PWN
David DiPilla You should not have to pay 500 to 900 dollars for a phone thats not worth 100 dollars they get over on people like i got the droid 3 last year which is a terrible phone andorid sucks lol but i want the new iphone coming out i don't want to pay 900 dollars for it when its only worth 100 dollars people should beable to upgrade their phone every year at a low cost
Matt Polkiewicz Yes, I would. Most people are idiots. They are willing to plop down $100 a month for service but are too cheap to actually buy the phones outright. This is one of the reasons that the US is in so much fucking debt.
Angel Jewels I'm really surprised the conversation has gotten this far without the phone manufacturers shutting people up. They have the most to lose if we give up subsided phones.
Shannon Steele hell yeah paid 560 for nexus s
Jerry Adney If I could take it anywhere and activate it then hell yeah I would. So what if the carrier subsidizes $400 of your $600 handset? You pay that off (and then some) by paying ridiculous monthly bills for two years. There is no incentive to compete on plan prices when you are locked in and it's the only way to get a high end handset. Sure, you can buy off contract now but then you pay the same monthly bill so there's no advantage. If I could go back to paying $40-50/month for voice and data (instead of $80) I would be glad to spend $600 on a device I use daily for 2 years. that will never happen as long as you can only buy phones locked to one carrier.
Toney Bobek I have paid full price, don't recommend it
J Litz Van Only if it can make me breakfast everyday.
Dan Lupescu If the phone worked on any carrier yes. This might work out in the future as tmobile switches to a compatible band with att. Sprint/verizon phones should be interchangable as well, and then yes, they should no longer be subsidized.
Ron Smith I've only paid full price once and depending on the device, I probably would again, especially if the carriers come back to earth and offer plans with cheaper rates and perks to keep you loyal. Oh yeah can I have back my truly unlimited data plan please!
Gerald Dawkins Who benefits if I were to pay full retail, unless u can take a phone and use it on the best network regardless of who sales it. Who wins. I would love the galaxy note or razor Maxx on tmobile .
Alechia Jones Enfinger That was suppose to say my phones not NY phones lol
Alechia Jones Enfinger Nope haven't yet I get all NY phones on upgrade price and usually get the free ones or really cheap and so far I've gotten the iPhone 3g 4g and LG thrill for under 1$ and love them all exspecially the LG thrill which takes pics in 3D loving it...
Matt Cain If I'm going to do that, you had better come off with a full unlimited everything plan. NO THROTTLING ANYTHING! That is the only way I could justify paying that much for something I'm really only supposed to use for 2 years.
Chris Moody Not unless I can buy a carrier unlocked phone and can choose what company or service I use. Also I'd want to be able to not be locked in to a two year contract .... like the way Nexus One was.
Devin Tolliver Hell Nah!
Lewis Hachmeister Still happy with my full retail Nexus One!! And grandfather plan with no contract. Love it!
Dee Moe I do all the time
Tim Taricco Full price is fine if monthly bills are lower and no contracts.
Huey Liggins Pay 500-700 dollars for device that costs 5 dollars to make over seas? No. Its bad enough I paid 300 for my galaxy note. And I did the math. Overall you'll only save 100 dollars the first year if you buy off contract. Just have discipline and wait out two years
Derrico Brown I wouldn't pay full retail price for a phone and I'm the type that upgrades every 6-8 months. I have find ways to get a new phone w/o having to pay full price. If major carriers just sold phones w/o contract then people would eventually jump ship whenever they wanted to if another carrier had a better phone and they had the $ for it. Then carriers would start going back to making phones cheaper on contract again. If T-Mobile isn't making enough money selling phones, then maybe they should do what Verizon is doing and make their "elite" phones $299.
Bryce Poulton I'm going to let all of you who are saying "NO" in on a little secret. You are paying full price for your device one way or the other. If you take the subsidy on the phone you are paying back the discount through your rate plane prices.
Mark Gittens Hell no haven't in 10th years lol
Jimmy Duong Yes. Absolutely. At least that way people who are getting the phones and plan can actually afford them. I see people with iPhones using food stamps. Really?!
Leroy Langston Craigslist.org
William Young It wouldnt be that bad if some of the phones werent so high
Steven Pereira Yes. I see my phone as more important than my laptop and I seem to drop eight or nine hundred every two years. I HATE having to choose between waiting two years or paying full price for a phone. As it is I wait for the next coolest phone (all set with my Note for now) and jump carriers...it cost me less to leave Tmobile for ATT for my new phone. Besides who trusts eBay for a phone?
Skylor Mitchell Isn't that basically what T-Mo's month-to-month plan is? You have to either have your own device, or pay full retail for a new one. I paid almost full retail for my Evo Shift almost a year ago, only discount was the "Sprint Premier" discount for having service for 1yr with a new 2yr contract. Wish I had just paid full retail instead, then I would be done with my contract.
Scott Ritchey I've already done this with tmobile. Its good because i save money through the length of the contract (50) $ straight a month. No taxes. Its a good deal
Roger Schubert DeOliveira Let's do a little math shall we....full retail on a phone...let's say $600....great...now the plan is $60/month. Same phone with a subsidy is $200....oh wow! But wait! The plan is $80/month....over your two year contract you pay $480 more in monthly costs ($20*24 months). So that $200 phone actually cost you $680....doesn't sound like much of a difference....but its $80...
Frank Smith Jr You almost have to pay full price to get a quality device like the Galaxy Nexus with no carrier bloatware and full functionality.
French Twist I was talking about the Nexus One.
French Twist Google and T-Mobile had the right idea offering a lower price plan, no contract but people are to greedy and too lazy to do the math and see that they actually would come out ahead buying the phone right off.
Jersey Joe Da-Know If i'mgo nna pay $649.00 4 a phone (Galaxy nexus) My monthly bill would have to be AT LEAST "1/3" of what it currently costs me NOW, "&" NO CONTRACT "&" (If my credit is good enough) Allow me to pay off the phone over 6 months via my monthly bill !!!
French Twist Yes,absolutely! F..ck contracts!!!
Jesse Huertas I would love the option of buying phones directly from the manufacturer and taking my business where I feel like it. I think removing cell phone companies from the business of selling phones would bring down the phone prices dramatically. I mean, how is it that my Asus Transformer cost me 399 and it does everything my Galaxy SII does, and if it wasn't for a two year pricing, my Galaxy S would have been 700? I refuse to believe that simply the AWS chip hiked up the price that much.
Abram Wenevermet Dennis My last HTC broke in a month so why pay $500 for a phone when all the insurance will give u in exchange is a piece of crap Refurb..
Jason Torchy The only phone I have paid in full was the nexus one. Never again.
Chris Hagood If it meant a lower price on my plan, then yes. Otherwise, you can already do this now and not be tied to a contract, except that your plan will be the same amount as someone who is locked into a two-year commitment.
Abram Wenevermet Dennis Id rather pay full price but it seems the phones retail value just isn't worth it..I mean most phones retail for more than the tablets..smh
Tyler Frodl depends on the phone
William Wadsworth It is harder to miniaturize components for phones, so they will be more expensive than tablets. Think of all of the room in tablets to put bigger, cheaper versions of the hardware.
Jersey Joe Da-Know Not only "NO", but "HELL NO" !!! FULL RETAIL PRICE is RIDICULUOS!!!!!!
P.j. Smith Way to costly! Im not paying $700 for a phone
Mark Belkowski Ive paid full retail many times.
Jasmine Mullins Garcia Never. I understand making a profit...but you can't tell em it costs 400$ or more to make an iPhone or HTC or whatever the brand may be. So absolutely not. If people pike att were to start requiring it, businesses like straight talk will get my money.!
Warren Saunders Not sure how it works in US but here in UK phones are always available to buy without contract, including iPhone.that's why I'm upgrading my EVO 3D to the ONE X next month, ooh yeah :)
Yannis Pyrros As long as the service is adequately priced and contract is monthly rolling.....
Chris Phirman In exchange for lower plan prices, absolutely. People get caught up looking at current retail prices; but, if we move to a subsidy-free model there will be more competition b/t manufacturers and a much bigger incentive to price their devices competitively.
Jonathan Steele cell phone subsidy doesn't equal saving in a longer term because you end up paying more for it.
Hubert John Abiera Yeah. I have done it multiple times. Also, I don't like being tied down to contracts.
Wilson R. Torres Phones or tablets should not cost more than $200, but there are people willing to pay over $600 for one. That's insane.
Jovani Corona Nooo u shouldnt
Ray W. Scott Yes I would if it meant lower rates and no contract, and if the retail weren't so inflated.
Brett A Wise Sense T-Mobile is thinking this, people will switch. Lol
Kerri Kershaw Yes, that's the only way we do it now. Very happy too!
Nain El Fuego Romero My last two phones were paid full retail. HTC G2 and now the HTC amaze 4G. Spent a little over a thousand dollars between both devices. Not bad at all if you want to keep up on tech.
Evan Tampubolon Phones are expensive even with a contract, so no. Im only speaking for myself but options are always good.
Josh Therezo I've done it multiple times when I wanted to upgrade to a new phone, but wasn't actually eligible for an upgrade. You can get them on ebay, amazon and websites like swappa.com NEW and used. But always for a lot less than retail.
Mike Johnson Don't we have the option already to pay full price on phones if we don't want to extend our contracts? How's that working out with the general public.
Devin Vosburgh I have...hurts real bad...buyers remorse always follows.
Mark Bessey I also think that if people were buying phones outright, the phone vendors would start being more competitive. Right now, there is not a lot of pressure, since the customer only pays $100 or $200. If monthly rates went down, there would also be a more competitive resale market.
Mathew Poynter letme see um NO! are they on crack!?
Jennifer Nunn Yep I've done it several times in the past.
Camille Robinson @Handy Manny... I know right!!
Gilbert Galvan Bring the Galaxy Note to TMobile.
Ashleigh Morton Guess it kinda depends on wat phone it is
Curtis M. Cook Same here my last 3 phones were bought online unlocked. 2 of which where Nexus devices to use on T-Mobile.
Derrick George yea unless my phone is broken dont have insurance
Gary Lancaster Uh, have you seen the retail prices of phones compared to retail prices of tablets?
Alex Villalpando I actually wouldn't mind paying full cost if it means no contract say you buy a phone on craigslist and go to Verizon and just get a month to month or shorter term contract
Mitch Lopez Depends on how much.
Frederick Hoefert of course. btw, thier prepay plans are essentially that
Frank Porter I have before and will do so again the next time I want a new device.
Handy Manny Do you see the Gas Prices?
Zak Raptis T-Mobile is only complaining because they are failing as a company. I don't hear the bigger companies complaining
Tyler Brewer depends.
William Wadsworth T-Mobile is already doing that. It seems like a good deal to me. They charge $20 a month for 5 GBs and voice/texting costs less. It's called the value plan and they split up the cost of the phones onto your monthly bills.
Samuel Cummings An OPTION wouldn't be bad... but the moment a carrier says "No more, period..." Heh. Nobody's gonna pay $300 for a basic flip-phone. ;]
Nathaniel Newman Second! They already chrarge too much as it is. If they are wanting people never to buy a phone again in this economy then remove subsidies for phones.
Mark Bessey I would if it meant a lower monthly rate and no contract.
TyShawn Loudia Guyton Uhhhhhh *checks wallet*...... No!




Most popular Videos
Most popular Videos
Most popular Videos

Most popular Reactions
Most popular Reactions
Most popular Reactions

This weeks "People's Choice Rankings" best smartphones
People's Choice Rankings


See all hot devices