Cheapest iPhone 7 & Plan Combo Tactics

It’s that time of the year again, where I try work out the cheapest way to get an iPhone and a plan to use for the next 12 months until the next iPhone comes out. I think I’ve done this every year for the past 9 years. Damn.

Some assumptions:

– You want a new iPhone every year. If you’re a 2 year upgrader, just get a plan with enough data from a telco you like and see the contract through.

– My aim here is to find the purchase method and mobile plan that has the lowest total cost of ownership over the 12 months.

– I’ve only done the math here for an iPhone 7 Plus 32GB, because that’s the iPhone I want. The pricing for different models is pretty linear, but do your own math if you’re after a different sized iPhone.

– I also assume that in 12 months time, I’ll be able to sell my old iPhone for 50% of what I paid for it, as that seems to be about what a previous generation iPhone with a few scuffs and scratches on it (fuck cases) sells for lately.

The first option is to BYO iPhone and go on a pre-paid or 12 month SIM only contract.

What plan ya go on probably won’t be the same as mine, but if I was in the market for a new SIM only service, I’d probably go with one of these:

Aldi XL (Telstra) – 6GB/m, unlimited calls & SMS, pre-paid – $35/m
TPG (Vodafone) – 7GB/m, unlimited calls & SMS, no lock-in contract – $34.99/m
OVO (Optus) – 8GB/m, unlimited calls & SMS, no lock-in contract – $34.95/m
Optus – 8GB/m, unlimited calls & SMS, 12m contract – $20/m (it’s $40, but I get a $20 broadband bundle discount)

Over 12 months, I’d have spent $420 on the plan (12 x $35) and $1269 on the phone. Then I sell the phone for about $650. This means my out of pocket expenses when the next iPhone drops is $1039 ($420 + $1269 – $650). A monthly cost of $86.58.

Ok, cool, not bad. But what about if I went on a phone contract with a telco, then just renewed the contract in 12 months time when the new iPhone comes out? Let’s see how that works out.

Optus have the 32GB iPhone 7 Plus on a plan with 7GB of data for $87/month ($2/m for the phone, $85 for the plan – which would actually be $65/m for me with the broadband discount, but I’ll ignore that for now). After 12 months, I’d have spent $1044. Then when the new iPhone comes out, I re-contract to whatever new plan Optus has that costs the same or more as the plan I’m on ($85/m). This will mean some fees for breaking the contract.

Optus say on their iPhone plan webpage that “If you need to leave your plan early you can. Simply pay out the full remaining cost of your phone including any amount Optus was going to cover.” – I take this to mean that any plan cancellation fees are waived, but you still gotta pay Optus back for the unsubsidised amount for the phone. The phone is $1269 and you’re cancelling it halfway, so I assume that you’ll owe Optus $634.50. Assuming I sell the old iPhone for $650 (very likely), that means I’ll just about break even.

The total cost of ownership with an Optus 24-month contract, then renewing it for the new iPhone is just $1044 (which is less if you manage to sell the iPhone for more than $635). Monthly that’s $87, which is pretty much identical with going outright and on a no-lock in contract.

What about Telstra though? That’d cost more, right? Surprisingly, no. Getting a Telstra contract then cancelling it works out to be even cheaper than Optus. They have a 10GB/m plan for $116/month ($95/m plan + $21 for phone). When the new iPhone comes, I re-contract for another 24 months and all the fees are waived, all I need to pay are the remaining handset repayments ($21 * 12), just $252. All up over the 12 months I’d have spent $1644. Sell the old iPhone for $650 and I’m only $994 out of pocket. That works out to $82.83/m.

Vodafone are even cheaper! I was able to talk to a live chat person and had someone answer me on Whirlpool to confirm that the same thing Telstra does, applies to Vodafone too. If you re-contract on another 24 month plan, they’ll waive the remaining plan repayments and all you gotta do is pay out the handset costs.

Vodafone have a plan with 11GB of data for $107/m (Plan $90 + Phone $17). 12 months of this works out to $1284. When I re-contract, I’ll be asked to pay $204 in remaining handset fees ($17 x 12). I sell the old iPhone for $650, leaving a total 12 month cost of $838. That’s only $69.83 a month. A goddamn bargain and way cheaper than getting a $35 plan from TPG with only 7GB of data, plus you don’t need to pay upfront and you can pool your data with other plans on the same account (e.g: an iPad, or mobile broadband or your kids or partner’s phones). If you’re a student, you get a further 10% off too, making the bargain even sweeter.

Telstra, Optus and Vodafone offer the ability to pay $149 or $99 and upgrade to the new phone after 12 months (aka New Phone Feeling). Don’t do this as it’s shit value as you don’t get to keep the iPhone. The total costs are awful value – Telstra: ($116 x 12) + $149 = $1541 vs. $994. Optus: ($87 x 12) + $99 = $1143 vs. $1044. Vodafone: ($107 x 12) + $149 = $1433 vs. $838.

Unlike previous years, it looks like the best value for a yearly iPhone upgrade is to go on a 24 month contract and re-contract every 12 months. No upfront cost, but you are kinda locked to that telco indefinitely (hence why they love it so much, hah). Personally, I’ll likely go with Telstra because Vodafone has me on their shitlist for credit and refuses to give me a contract of any kind (even SIM only) and won’t tell me why. Happy iPhoning!