Thoughts on Annual iPhone Upgrades



This year I decided to buy an unsubsidized iPhone so I could save a bit of cash on my monthly wireless bill, and so that I could own my iPhone.

But, the more I think about it, the more I wonder if that’s the best route after all.

Over on Lifehacker, Whitson Gordon crunched some numbers comparing the cost of a new phone to the value lost over 1, 2, 3, and 4 years. In short, if you’re holding onto your iPhone for 2-3 years in order to save money on upgrades, it’s actually not that much money saved compared to just buying a new model and selling your old model year over year.

This, of course, assumes that you are selling your old phones when you buy a new one.

However, nowadays, all the wireless carriers are making it much more difficult to buy a subsidized iPhone (which is why I decided to go with unsubsidized).

If you’re able to wrangle your carrier into selling you a subsidized iPhone, or you’re willing to just buy one unsubsidized, then you can rest easy to know that you’re spending about 1/2 as much compared to leasing your iPhone.

But, that’s only if you’re selling your year-old hardware on Craigslist or eBay. Which has become a challenge these days.

And thus, for those of us who don’t like to hassle with selling our iPhones on Craigslist / eBay, we trade it in to Gazelle. But Gazelle doesn’t pay as well (because they have to make a profit as well) and thus your net expense of ownership goes up.

And then there is another thing to consider: with Apple now also offering their iPhone leasing/upgrade program, it makes me wonder if the resale value of an iPhone will go down in the coming years. I suspect a lot of people will prefer to pay $32.41 or more per month and just trade in their previous iPhone in order to upgrade every year.

Here’s another way to think of it: a base-model iPhone 6 costs $649 unsubsidized. If you buy it, keep it in pristine condition, and then sell it one year later, you’ll get as much as $450 on eBay or Craigslist, or as little as $320 on Gazelle.

In that scenario, you’ve spent between $200 – $330 to use your iPhone for a year.

If you were to use that same iPhone for a year, except this time go through the Apple Upgrade plan, it would cost you $389 ($32.41 x 12).

And so, while Apple’s Upgrade Program is $60 more expensive at best, it also comes with Apple Care, and you don’t have to worry about keeping your device in pristine condition in order to get maximum resale value from it at the end of the annual upgrade cycle.

From where I’m sitting, if you like to upgrade every year, if you’re not ultra-thrifty, if you don’t care about keeping your old hardware, and if you like to pay for convenience, then Apple’s Upgrade program actually sounds like a pretty sweet deal.