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When purchasing cell phones, there are two varieties to choose from; locked and unlocked phones. Locked phones are those that are ties to only one wireless carrier and require a contract with that carrier, whether pre-paid or yearly. Unlocked phones allow the purchaser to go to any carrier he wishes without being locked into one.

Many people opt for locked phones with a contract because of the lower cost required to purchase the phone and the plans. However, over time considering the cost of the monthly contract over one or two years added to the cost of purchasing the phones, purchasing a locked phone cold cost much more than shelling out the cash upfront for an unlocked phone.

As an example, the T-Mobile MyTouch 3G phones are offered as both locked and unlocked for $150 and $400, respectively. If a customer purchases the unlocked phone for $400 and pays for the $60, 500 minutes a month text, voice and data plan, over two years of service, the total comes to $1,840. While this may seem as a lot of money to pay over two years, consider the following. The same phone purchased locked and on contract with the same 500-minute plan costs $2,070.

This is because T-Mobile adds $20 a month to the voice and data plan to cover the cost of the subsidized phone. Either way, the customer is paying the $400, however given the convenience factor, customers always pay more for subsidized phones. This is because over the course of 24 months, the phone is paid off well before the end of the contract, but the carrier continues to charge the same price for the plan regardless so that while they have already recouped the cost of the phone, the customer is still paying extra.

This formula is seen with all carriers and with all locked and unlocked cell phone comparisons. In most cases, the differences in the comparison amounts are much higher, especially with some of the pricier phones. When deciding on purchasing a phone, make sure to cover all points before deciding on a locked or unlocked phone.

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15y ago

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