If you’re like most of the modern world these days, you carry some kind of smartphone in your pocket. Smartphones are closer in functionality to computers than cell phones (did you know that they still make phone calls?), and they usually carry some very computer-like price tags! With their growing popularity and accelerating model releases, the used phone market is huge!
Wireless carriers are quickly catching on to this trend, and over the last couple of months have begun to roll out trade-in programs to try and slice themselves off a piece of the used phone pie. But are their phone trade in programs worth it?
Case Study
This month my company is switching cell phone carriers. We’re currently with a certain magenta carrier, and I carry a Samsung Galaxy S3, which was the premium non-Apple smartphone from 2012. I’ve only owned it for one year this month. Big Red (the “can you hear me now?” carrier) has a phone trade in program available in order to give me some money for my “old” phone. They also have some great low-cost phones they’d like to sell me, including the same S3 I currently have.
We got some quotes from them and found out that I can get a comparable Galaxy S3 on their network for only $80. On top of that, they will give me $100 for trading in my old Galaxy S3 from a competing carrier. Awesome, right? I make $20 for switching to their service plans, and I get a brand new smartphone to boot!
But if you dig into the prices a little bit you’ll see that there’s more going on behind the scenes.
How Much Does A Smartphone Cost?
Worthless! Right?…
Pay no attention to the smartphone prices quoted you by wireless carriers! Most people would like to believe that they carry around a $150 or $200 phone in their pocket, but those miniature computers actually cost $500-$700 brand new. The wireless carriers can charge a premium for their service plans, and recoup the difference in cell phone prices over the life of the contract (which is why they want you to sign a 2-year contract to begin with).
So, for example, you might pay $90/month for a cell phone plan, but $30 of that is going to pay back the “loan” you got when you bought your smartphone for $400 below list price. Make sense?
Back To Phone Trade In Programs
If you compare the prices out there on ebay, you’ll notice that smartphones sell on the used market for MUCH higher than they do new. It makes sense though, because no one is subsidizing the cost of the phone online! My Galaxy S3 (even with a scuffed corner and a chip in the plastic) will sell for upwards of $350 on ebay. And the wireless carrier wants to give me $100 for it! I mean, we’re not talking about making 25% more by selling your old phone yourself, we’re talking about hundreds of dollars!
Not many folks understand just how much smartphones cost, especially on the used phone market. So before you trade your phone in or give it to your kids to play Angry Birds with, do a little bit of research! It’s not very difficult to make a couple hundred extra dollars by selling your phone instead of trading it in.
Alternatives
As a bonus to the information above, here’s a tidbit on a growing trend, if you’re interested in getting out of the subsidized phone game. Check out some of the alternative wireless carriers out there that only charge you the cost of your service, not the cost of the phone. Instead of the $90 phone plan you might pay for at one of the major carriers, you can find plans for $55 or less that offer the same features! These carriers also piggy-back on the networks of the major wireless networks, so the call quality and coverage is generally the same.
A few options you’ll want to check out are Tmobile Prepaid, Straight Talk, Page Plus Cellular, Ting, and Republic Wireless.
Some of these plans are BYOD (bring your own device), and others require you to purchase an inexpensive device from them. But all of them have good plans available that can save you some serious money!
Happy hunting!