Where do you draw the line on no-contract pricing?

Taylor Martin
 from Concord, NC
Published: November 9, 2012

Nokia Lumia 920

Smartphones can be rather expensive, both to operate and to own. Monthly rates for individuals through some of the nation's largest providers start around $70 per month and can stretch as high as $140 or more. And the devices themselves, subsidized with typical two-year agreements, can cost anywhere from around $50 to $300. And, as the Galaxy Note II has shown, $300 is not the limit. T-Mobile offers the Galaxy Note II with a two-year agreement for a staggering $369.99.

The problem, though, is that the effect of subsidizations has waned over the last several years. Before, a phone might cost $649 without an agreement, yet the device might only sell for $149 or $199 with a two-year agreement. Now, a solid portion of devices come at $299 with a two-year agreement with the same no-contract pricing. Again, the Galaxy Note II is $369 with a two-year agreement. However, it can also be purchased without an agreement for just $280 more, or $649 in total (plus tax, of course).

That's the same monthly rate, yet a significantly smaller discount off the retail price of the device – 69 percent discount versus 54 percent off – for the exact same agreement length and terms.

Not only that, but signing an agreement can be a tough knot to swallow if you're the type that likes to keep up with the mobile industry. By the time a two-year contract expires, the phone you signed that agreement for has likely aged more than your seven-year-old computer – that is, if it even survives that long. It's a miracle these days if a phone lasts a couple months without facing some fatal freak accident, like getting slammed in a car door. And even with insurance, you're not always guaranteed to get the same phone you previously had after a claim. If the phone is out of stock or discontinued, you will likely get something comparable or a newer-generation of the same series device (i.e.: original Galaxy S phones might have been replaced with their Galaxy S II counterparts after some time).

This is where buying no contract can really pay off. Don't get me wrong, it's a tough knot, too. Full retail pricing is gut-wrenching sometimes. Like, for instance, new unlocked devices can run the bill upwards of $800, especially if you're importing an international device from overseas through a retailers like eXpansys or Negri Electronics.

Typically, full retail pricing for stateside devices peaks around $700, though. Most come in at $650. And lately,  there have been a handful of devices that have come with seemingly affordable no-contract pricing. And I've noticed a lot more people leaning towards buying a phone sans agreement.

For instance, Google announced the LG Nexus 4, which will sell for $299 for the 8GB version and $349 for double the storage. Those are typical contracted prices, not full retail. And then there's the Nokia Lumia 920, which could have easily ran the bill up to $700 or more. Instead, through AT&T, the Lumia 920 is $99 with a contract and only $449.99 without. And the Nokia Lumia 822 from Verizon will go for $449.99 without a contract, too.

Also, while not quite a cheap, the Samsung Galaxy Note II is only $649 without a contract on all the nationwide carriers. I figured it would go for at least $700 or $800, seeing as its smaller brother, the Galaxy S III, is still between $550 and $600 without an agreement.

Point being, there are some great phones to be had for reasonable no-contract pricing.

Spending north of $500 may seem like a lot of money and, well … it is. But if you buy the right phones, it can pay off. Some devices hold their value quite well over time. Once you get tired of the device and something new comes out, you can sell the used device for several hundred dollars and put that money back into the pool for a new phone. Play your cards right, and you can get out only paying roughly $100 or so to get a new phone every couple months.

But when there are phones selling without a contract between $299 and $449, it's a no-brainer. Just as much as the Lumia 920 for $99 is a steal, the Lumia 920 sans contract for $449 is, too.

What I'm interested in, though, is how much you are willing to pay for a phone. Are you willing to pay $400? $500? $600? More? Where do you draw the line with no-contract pricing?

I've bought many no-contract phones in my day. I've swiped my card for $537.49 (that's $499.99 plus NC state tax) too many times. The most I have ever spent on a single phone is just under $700, the 32GB iPhone 4S. But that's where I drew the line. I typically won't spend more than $500 on a phone anymore, and if I do, it's because I've sold an old phone to counterbalance the price. But much over $500 is too much to stomach these days, considering resale value plummets rather quickly.

How much are you willing to spend on a phone? And with some high-end phones coming at fair no-contract prices, are you more willing to put up a little extra cash for a new phone sans contract? Where do you draw the line, folks?