Wednesday, 16 January 2013

Phone plans vs prepaid

I use my phone very little for phone calls. Mostly it's my pocket notebook, navigator and my window to the web. It's the computer I can have with me everywhere. Because I use it so little for phone calls, I wonder if I would be better off with a pre-paid phone plan. Let's see.

I'm currently on a $29 plan with 3, who were purchased by Vodafone in the middle of my contract. Over the 24 months of that plan, my total cost is about $696. My included call credit ($180/month) easily covers my calls and texts. Every two years, I sign up for a new plan mostly to get a new handset for free, so that would have to be part of a pre-paid budget too.

Now how would a prepaid plan with a BYO handset work? The new handset I currently want is the Nexus 4, for $400. If I had to buy one every 24 months, that leaves just $296 for calls and data over the two years, or just more than $12 per month. I'd have to survive on a $30 top-up only four times per year to make a pre-paid phone more cost-effective than a 24-month plan. I use more than that, though I do use fairly little.

So what about if I were to sell my old phone after 6 months and buy a new one? Well, that's much worse. Even if I were able to reclaim 75% of the original price and the prices of new phones didn't go up, I'd still be spending an extra $100 every 6 months, which is a bad deal, price-wise. It's the same cost as replacing the $400 phone every two years. The only difference is that the average age of my phone would go down, and that doesn't matter very much to me.

Mokalus of Borg

PS - I've never had a prepaid phone, so I might be missing some important factor.
PPS - If not, then they're terrible value for me.

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