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Is it better to buy your phone on contract or unlocked?

We’ve all heard the standard phrase before: “I only paid 50 dollars for my new smartphone!”  At the moment when you’re looking to get a brand new smartphone and contract, this can be one of the most tempting things. However, how good of a deal is it to get a phone at a subsidized price versus buying a smartphone outright? We take a quick look at it. 

Should you buy the Samsung Galaxy S5 outright or get in on contract? © ANDROIDPIT

Note: the objective of this article isn’t to compare different packages or contracts across various providers, but rather to just verify whether a subsidized phone is worth it in the long range. Of course, there are different types of packages available, such as prepaid service or buying the smartphone from another reseller, that could reduce the price of one or the other, but for the purposes of this article we’ve kept the plan and smartphone the same.

As well, we got all the information for the price of plans and smartphones is from AT&T.

Buying an unlocked smartphone

Despite lower prices being displayed on sites such as Amazon, you can currently grab the 16 GB version of the Galaxy S5 directly from AT&T for 649.99 US dollars. If you go this route and choose the standard 2 gigabyte contract with unlimited talk and text, it will run you 50 US dollars a month for two years.  In total, you will pay:

  Buying an unlocked smartphone + plan
Contract (24-month commitment) $50.00 x 24 months = $1200
Galaxy S5 naked $649.99
TOTAL 24 months $1849.99
 Survey says: if you've got the cash, buy your phone outright. © ANDROIDPIT

Buying a smartphone on contract

The same Galaxy S5 costs 199.99 US dollars when you choose the subsidized version and the monthly plan now comes in at 80 US dollars a month. Again, this is for a contract term of two years and in total you will pay:

  Buying on contract
Contract (24-month commitment) $80 X 24 months = 1920
Galaxy S5  $199.99
Grand total $2119.99


The choice is very apparent: at the very surface of things and in the long run, it is cheaper to buy an unlocked phone and choose a package that suits you. However, this require you to put forward a lump sum that may be more than you’re willing to spend. As well, the freedom of not being on a contract means that you don’t have to be constrained by anything long term and can, as long as the smartphone is compatible, switch carriers and plans on the fly.

What do you when you get a new smartphone? Sign a new contract on a subsidized price or buy your phone outright? 


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  • I'd go for unlocked smartphones.
    There's another detail that only few people consider, which is that when you buy an unlocked device its easier to trade, that allow to sell the phone to anyone, anywhere. In that way you cash back a portion of the first investment...

  • Bojan M. Sep 30, 2014 Link to comment

    It seems there's is consensus on buying unlocked phones only, which is something I was doing exclusively in the past. But contract is not all bad. For example, I'm using a plan I need and even better, which means, phone or not, for my usage I'm paying less than I would without contract. And if I can get a phone as a bonus, for some, usually very small amount, that's very fine with me. Branding? No way, I'm rooting the phone immediately and flashing clean ROM (OEM's or custom), no branding, no junk, can use whatever SIM I want. In my particular case, contract is a better option.

    • I guess when they say branding , it's referred to the external sign that telecom carries print in the body (Verizon, ATT, etc.)

  • CJ Brown Sep 29, 2014 Link to comment

    No contract / unlocked !!
    Does anyone actually enjoy being raped financially under a carrier contract? I feel sorry for you if you're stuck in a contract (exceptions? maybe a family plan IF everyone pays their $40 share separate) ....

    I got my 32gig Moto X 5 months ago for $320 on Amazon, had MetroPCS install a Sim card, kept the same smart phone #, pay only $50 a month (and I will keep this Moto X 'til it no longer gets updates in software) ....

    If Oppo and Huawei reach the point where their smart phones are immediately getting Android OS updates? I may switch to one of theirs (less bloatware via 'no contract') ...

  • getting a phone on a contract is such pain in the pocket. It's impulsive buying especially if you're aiming for high end smartphones. We need to differentiate wants from needs. smartphones are considered wants because not all of us works on technological stuff. About a year ago I saved money for 6months to get an S4. And I won't buy another high end smartphone as long as my current phone is kicking. In totality, you are spending more in a contract, just like paying con credit card with interest.

  • sinkster
    • Admin
    Sep 29, 2014 Link to comment

    You don't get nothing for nothing. The only benefit of a contract was to make it easier to get the latest models without a huge upfront payment. Now there's no benefit; in 3-4 months it's superseded by a newer model and the original price drops by a third, or more if you're willing to use Ebay.

  • I bought mine Nexus 5 for 400€ (couldn't buy it in the playstore at the time that I bought mine) and I pay 15,50€ a month for 100 minutes or text messages and 1,5gb.

  • Just get an iPhone...

    ( showing you all how obnoxious it is to do what you nuts do on Apple sites. Grow up.)

  • Reg Joo Sep 28, 2014 Link to comment

    Lower your expectations on the phone, and you save a lot more. Get your unlocked phone from a reseller(like amazon), save some bucks, get a moto(new) x/g, that most won't know the difference in performance, go to xda, for a tune up, and enjoy that extra cash on something else that's more important in life.

  • My1 Sep 28, 2014 Link to comment

    AP staff you also forgot that when buying your phone unlocked you dont have to deal with branding, in other words you will probably also get fatser updates and your phone may be a bit faster compare to have all that software branding on it, not to forget that (not in germany but seeminly more evident in the US) carriers tend to write their name and/or logo everywhere they can, like the Note 2 Home button -> ridiculous...

  • I no longer sign contracts for mobile phones, I buy them sim free off Amazon and then get a SIM only deal its saved me a fortune. The truth is the 'subsidised' handsets through the carriers are anything but, the phone might be 'free' upfront but they make up the cost difference and then some by increasing the monthly cost of the contract.

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