What the first iPhone 6s deal means for future iPhone prices

The changing landscape of cellphone payments mean most will pay full price for the iPhone 6s and iPhone 6s Plus, but plenty of rebates and credits will be available as well. 

|
Beck Diefenbach/Reuters/File
The new Apple iPhone 6S and 6S Plus are displayed during an Apple media event in San Francisco.

As we've mentioned before, cell service providers are moving away from contracts and the subsidization model that many shoppers are familiar with. And as a result, many of us may have to pay full price for our next phone. With this drastic change to the pricing landscape, it begs the question: How will this affect phone deals?

Well, the first promotion for the iPhone 6s might have given us our answer.

No Subsidies Means Paying About $649 for Your Phone

But first, let's review how things have changed.

Prior to the shift away from contracts, shoppers could sign up for a 2-year contract with a wireless provider in exchange for a reduced-cost smartphone. That's why, for the longest time, flagship phones would debut at $199; that was the cost that providers were willing to charge if you committed to their company for two years, usually with a very expensive monthly plan.

But now, only AT&T is left offering subsidies. VerizonT-Mobile, and Sprint all push contract-free plans, which requires a shopper to pay full price for their phone. You can do that up front and pay about $649 for a top-of-the-line, newly-released phone, or you can opt for an installment plan that, coincidentally, breaks up the cost over a 2-year period of time. (But remember, it's not technically a contract... you just can't leave unless you pay off that phone. It's totally different!)

No More Free Phones

In the past, the subsidization model meant that we would frequently see promotions that would heavily discount these in-demand phones, sometimes even making them "free" when you resigned a 2-year contract. But freebies no longer make sense for carriers to offer if there's nothing binding a shopper to their service. After all, no contracts and no installment payments makes it easier for a customer to fly the coop.

However, it's unrealistic to think that promotions will go away entirely, so what kind of deals will we see in this new, non-subsidized world?

The Future is Gift Cards, Rebates, and Credits

This week, Costco became the first store to offer a promotion for the newly-announced iPhones.

Both the iPhone 6s 16GB model and the iPhone 6s Plus 128GB model are available at full price with a $100 mail-in rebate, which comes in the form of a Costco gift card. (Assuming you use the gift card, that's a net price of $550 and $850 for the phones, respectively.) These models are both offered through T-Mobile, which allows customers to use its installment plan, dropping the 6s to $27.08 per month and the 6s Plus to $31.25 per month.

With this deal, the customer is getting a sizable gift card in exchange for buying (and paying, likely in installments) through T-Mobile. It follows then that we can expect more "credit"-type offers for phones, now that subsidies are a thing of the past.

Promos for phones sold at stores, like the Costco deal, will likely include store gift cards, while buying directly from the carrier may yield bill credits (e.g., $50 off your first three months of service). We might also see manufacturers themselves offer traditional rebates for their handsets, although obviously don't expect Apple to do this. And naturally, deals on unlocked phones, with no carrier involvement, will continue as well.

This is Actually Better Than Past Deals

While the idea of paying a net sum of $550 might be a tough pill to swallow, this is actually a pretty good "first deal" for the iPhone.

In 2013, Walmart was the first store to offer a discount on the iPhone 5s, offering a meager $10 off the subsidized price. The retailer once again was first in 2014, cutting $20 off and offering a $15 gift card.

While it's not apples to apples (ha!), the $100 Costco gift card is a greater value than Walmart's "first deals" from years past. And while you're now paying off the full price of the phone, it can be spread out over two years, and you're free to choose one of the cheaper plans from T-Mobile as well, potentially netting a comparable monthly payment to what you might have had with the subsidization model.

Regardless, it seems possible that gift cards, rebates, and credits will be the main promotional tools that stores and carriers will wield when trying to entice paying customers.

Readers, what do you think? Do you miss the subsidization model, or are you excited about the future of phone deals? 

This article first appeared in DealNews.

You've read  of  free articles. Subscribe to continue.
Real news can be honest, hopeful, credible, constructive.
What is the Monitor difference? Tackling the tough headlines – with humanity. Listening to sources – with respect. Seeing the story that others are missing by reporting what so often gets overlooked: the values that connect us. That’s Monitor reporting – news that changes how you see the world.

Dear Reader,

About a year ago, I happened upon this statement about the Monitor in the Harvard Business Review – under the charming heading of “do things that don’t interest you”:

“Many things that end up” being meaningful, writes social scientist Joseph Grenny, “have come from conference workshops, articles, or online videos that began as a chore and ended with an insight. My work in Kenya, for example, was heavily influenced by a Christian Science Monitor article I had forced myself to read 10 years earlier. Sometimes, we call things ‘boring’ simply because they lie outside the box we are currently in.”

If you were to come up with a punchline to a joke about the Monitor, that would probably be it. We’re seen as being global, fair, insightful, and perhaps a bit too earnest. We’re the bran muffin of journalism.

But you know what? We change lives. And I’m going to argue that we change lives precisely because we force open that too-small box that most human beings think they live in.

The Monitor is a peculiar little publication that’s hard for the world to figure out. We’re run by a church, but we’re not only for church members and we’re not about converting people. We’re known as being fair even as the world becomes as polarized as at any time since the newspaper’s founding in 1908.

We have a mission beyond circulation, we want to bridge divides. We’re about kicking down the door of thought everywhere and saying, “You are bigger and more capable than you realize. And we can prove it.”

If you’re looking for bran muffin journalism, you can subscribe to the Monitor for $15. You’ll get the Monitor Weekly magazine, the Monitor Daily email, and unlimited access to CSMonitor.com.

QR Code to What the first iPhone 6s deal means for future iPhone prices
Read this article in
https://www.csmonitor.com/Business/Saving-Money/2015/0920/What-the-first-iPhone-6s-deal-means-for-future-iPhone-prices
QR Code to Subscription page
Start your subscription today
https://www.csmonitor.com/subscribe