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Summary:

The iPhone is definitely a hot commodity. There is no secret that the smartphone is in no small part responsible for Apple’s growing market cap, so we have a good idea what the iPhone is worth to Cupertino, but what is your iPhone worth to you?

iphone4-feature

The iPhone is definitely a hot commodity. It’s no secret that the smartphone is in no small part responsible for Apple’s growing market cap, so we have a good idea what the iPhone is worth to Apple, but what is your iPhone worth to you? It’s a timely question, since Apple’s iPhone refresh is now definitely approaching.

Buy, sell or trade

There are several resellers that are offering cash for iPhones, Apple also has its own Reuse and Recycling program, and RadioShack has a Trade & Save deal. You’ll get less than you paid new for an iPhone when you sell it, since we’re talking about new vs. used goods, but Apple products have historically retained a relatively high percentage of their value over time, as you can see in the chart below.

Selling your current iPhone as a means to fund the purchase of a new iPhone is an option to consider. Despite Apple’s efforts to keep the carriers out of the equation, the driving force behind the deals that accompany any new phone is getting carrier subscribers to sign up for another two years of service.  The resulting value gap is great for consumers, as it helps drive up the relative resale value of devices when compared to buying a phone with contract. Basically, people are very willing to pay for freedom from contracts. They may also want to take their iPhone to T-Mobile, as many have already done, despite the lack of 3G support for Apple smartphones on that network.

Early termination fees

But lets face it, the iPhone itself is only part of the cost equation. You also have your existing cellular contract to consider. If you’re looking get rid of your iPhone entirely, or if you just want to switch carriers for the new iPhone, consider the costs associated with terminating your contract early. Both AT&T  and Verizon  have very similar early termination fees (ETF). Basically $350, less $10 for each month of service that’s already elapsed on your current plan. Below, you can see the breakdown of what the ETF is depending on how much time you have left on your contract.

For some, it actually makes sense to remain behind on iPhone updates, buy used, and stay away from contract renewals, especially if they have grandfathered rate plans. And it is this aftermarket that is helping keep the trade-in market as healthy as it is. So which will it be for you this time around: abstain and strive for a contract-free lifestyle, or give in and commit to another round of cutting edge bliss?

  1. Jonathan Polley Tuesday, September 27, 2011

    Being contract free would me more attractive to me if the voice and data service was cheaper. If I know that I will be staying with company X for two years, why not get the contract discount?

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  2. The question is different for me. How much will ATT charge me to allow me to renew ahead of time? I am not switching carriers, just buying the new iPhone ahead of my 2 year anniversary. Any ideas?

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    1. I think you would have to buy the phone with no discount at all which would be close to the current unlocked price of $649. Check to see when you are eligible for an upgrade. It typically is 20mos or less. Dial *NEW# (*639#) from your AT&T phone to find out. If you bought the iPhone 4 on release day (June 24, 2010), then you would at the very latest be able to get a new iPhone by Feb 24, 2012.

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