Apple just announced the iPhone X. That’s the iPhone 10, not to be confused with the iPhone ex.
And pour one out for the iPhone 9 while you’re at it. That edition got skipped over like a nerd in a dodgeball draft.
As eager consumers eagerly awaited The Latest and Greatest, Apple announced the one piece needed to make your life complete could be had for the low, low price of $1,000.
Most news media outlets applauded with joy. This Business Insider journalist is 100%, totally on-board with the price. If Apple could just shut up and take his money, that’d be great…
Do we blame him though? After all, The Latest and Greatest comes equipped with a facial recognition scanner, in case you were fed up with lifting your thumb to unlock your phone with a fingerprint scanner, like a caveman.
But here on the Money Wizard side of the internet, that still seems like quite a bit for a phone built by Chinese slaves.
In fact, it seems like that could very well be the most expensive consumer good normal people will ever buy. More to the point, is the iPhone X more expensive than a car?
To the napkin math! The only type of math that’s allowed on the internet.
The Mysterious Cost of Cell Phones Over the Years
For a while, the price of cell phones was heading in the right direction. When this bad boy came out in 1982:
It rocked a price tag of $4,000. Adjusted for inflation, that beast would cost you $10,414 if it came out today!
But over the years, cell phones did what you’d expect any technology produced in a free market economy to do. Thanks the the miracle of competition and technological innovation, cell phones rapidly decreased in size and cost.
All is right, according to our timeline that ends in 2010.
But this is 2017, and in the 7 years since the end of our neatly packaged timeline, some strange force flipped the cell phone world on its head.
Let’s take a look at iPhone pricing since 2010. Remember, the original iPhone cost $395.
- iPhone 4? $650
- iPhone 5? $750
- iPhone 6? $750
- iPhone 7? $750
- iPhone 8? $800
- iPhone X: $1,000
Rather than reducing in price, cell phones are getting more expensive.
But just how expensive? Like, does it cost more than a car?
Do iPhones cost more than cars?
Unlike most personal finance bloggers, I don’t think something is automatically bad just because it’s expensive. It can make perfect logical sense to splurge on a expensive item, especially if it’s in the name of quality over quantity.
After all, I’m the guy who once got so fed up with three broken suitcases in half a year that I dropped $400 on a brilliantly engineered suitcase with lifetime warranty. Overkill? Probably, but if it lasts anywhere near a lifetime I may actually come out ahead financially.
Unfortunately, the Apple iPhone is brilliantly engineered – both in its beautiful retina display AND its planned obsolescence.
If the surgically attached battery doesn’t burn out, your hard drive doesn’t run out of space, and your phone avoids a drunken tumble onto the cement, you can bet Apple will eventually force their latest update onto your device. At which point, your phone mysteriously starts locking up and running at a snails pace, right in line with your two year upgrade plan.
Apple themselves admit you can’t realistically expect their phones to last longer than 3 years. According to my extremely unscientific polling of friends and family, even this figure might be overly ambitious.
So if the new iPhone X costs $1,000 and lasts 2 years, you’re paying $500 a year for your iPhone.
And you wouldn’t dare rock The Latest and Greatest without an unlimited data plan, would you? A nice comparison of the unlimited options shows:
- AT&T’s fake unlimited plan costs $60 a month.
- AT&T’s real unlimited plan costs $90 a month.
- Verizon’s unlimited plan costs $80 a month.
- T-Mobile’s costs $70 a month.
- Sprint’s costs $50 a month.
Averaging the five, the typical data plan comes out to $70 a month, or $840 a year. If we replace our iPhone every 2 years (which Apple will do their best to ensure that we do) that brings out total cost per year of iPhone ownership to $1,340.
Not quite as expensive as a car. Then again, most people don’t buy a new car every two years.
If we want to truly figure out whether a phone is more expensive than a car, we have to calculate the cost to owning The Latest and Greatest for 15 years, or about the average lifespan of a new vehicle.
In which case, at $1,340 a year, iPhone ownership will cost you $20,100 over 15 years.
Whoa. I admit I set out to write an article showing how expensive these 7 millimeter thick gadgets now cost, but even I didn’t expect the final number to be that high.
How to Beat the Overpriced Cell Phone Game
The rise of the iPhone has quickly become one of the most interesting expenses in the American budget.
10 years ago, they didn’t exist. Today, we have people making minimum wage and complaining about it on a brand new iPhone 7 Plus with unlimited data, and no budget pie chart would be complete with out a huge slice devoted to the cell phone.
While I don’t think it’s realistic that we all start using payphones again, I do think we can set down The Latest and Greatest and step back from the ledge.
Apple is making it blatantly obvious. They know they’re in the lead, and they’re content with gouging the hordes of Apple addicts fiending for the next cell phone announcement. Phones should be getting cheaper, but with each new release they’re just pumping up the cost.
Voting with your dollars is the only way to stop this madness. If you’re in the market for a new phone thanks to Apple’s planned obsolescence, now’s your chance to start retaking control.
If you’re upgrading from an older phone, you’ll feel high tech whether you get the The Latest and Greatest or something that was The Latest and Greatest just a few months ago.
You can pass on the iPhone X that costs more than a car, and you can grab a certified refurbished iPhone 5S for $190. If you really feel like going wild, the 6S is about $300.
Or better yet, if you really feel like giving a middle finger to the whole system, I’d go with Republic Wireless. (Affiliate Links in this post) They have unlimited talk, text, and WiFi data plans starting at just $15 a month. If you need some extra data, they sell 1 GB for just $5 more dollars a month, and even their 4 GB plans cost just $45/mo total.
You’d need to get an Android phone (tons of those for under $250) and watch your data usage a bit. But with WiFi in every house, coffee shop, restaurant, and airport these days, you’re going to have to make up some serious excuses for why you’d need more than just a couple gigabytes anyway.
It may not be the most luxurious option. But hey, you can always buy a nice car with the savings.
This post contains affiliate links. See the disclosure page for more info.
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Great, surprising article. It always amazes me when I see someone on a low income with the latest iPhone.
I agree with your advice, as it’s exactly what I have done. I bought my iPhone 6 off of eBay just after Christmas for £200 ($265). I then found a good deal on a rolling SIM only contract which gives me 1GB data, 500 minutes and 2,000 texts for £5 ($6.60) per month. This is plenty for me as I only use the internet when I’m at home and connected to Wifi, and if I’m away from home then my iPhone is just used to make travel plans. Arguably I don’t need an iPhone at all but I like them and I’ve got one that I can easily afford, so as far as I’m concerned I have the best of both worlds.
Glad you liked it, and thanks for sharing your set up!
IPhone 5S with 64 gigs on Verizon Prepaid. $50 a month and 7 gigs high speed data. Add a second iPhone 5S and it’s $35 a month with the second iPhone on the family plan and it’s own 7 gigs of high speed data.
IPhone 5S used is going for $99 to $150 depending on the internal memory.
A pretty deep discount for something that was amazingly high tech just a few years ago. Nice deal.
And this is Verizon 4G LTE speed. Also have work iPhone SE and IPhone 6. Not a significant speed change. All using iOS 11.0.3 at this point.
Thankfully I’ve never been an avid Apple fanboy…but I think I’m going to fork up money for a Pixel 2 this spring. $650 is much easier to stomach, and a switch to Fi will bring my portion of the cell phone bill down by about $40/month I think.
Phones are so dang expensive, it’s absurd. And everyone feels like they need the latest and greatest even if they don’t have the income to really support it.
Great eye-opening analysis on how much it really costs to keep up with the trend of high-end phone ownership.
I “waited” for the Pixel 2, but didn’t like the huge bezels on the smaller version so I got the Galaxy S8 instead which is only $625 right now. By spring the S8 price could drop even more. It’s a perfect phone except for the placement of the fingerprint reader which I’m sure will be “fixed” on the S9. Sometimes I wonder if they purposefully make small design errors on phones just so that they can later be “fixed”…hence the notch on the top of the iPhone X.
I have the Pixel “1” and it has been a great phone. Project Fi is where it is at too. Unlimited talk and text and I use less than a gig of data per month. Average bill is around $28. I saved myself almost $50 a month switching from Verizon.
I splurge on a new cell phone every year or two. I try to lower the damage by buying 4-8 months after the phone’s launch after the price has dropped and sometimes I’ll buy used or refurbished. I also never trade-in, and will sell my old phone on craigslist or Amazon instead. I buy unlocked phones and my carrier is net10, an MVNO under AT&T so coverage is great. I get unlimited voice and text w/8gb of LTE data for ~$41/month including fees and taxes.
The planned obselesence in the iPhone X is glaringly obvious. It’s a beta phone. I bet that the notch at the top of the screen and the larger-than-galaxy-S8 side bezels will be gone next year, and they might also have the under-the-screen fingerprint reader by then. Fanboys are gonna fanboy though so the iPhone X will sell.
Apple has applied the “Starbucks effect” to cell phones and I admit I’ve become sucker to it but at least I can “afford” it, and I understand the system. Before the rise of Starbucks, the majority of people couldn’t fathom the idea of paying $4.50 for a daily latte. Starbucks, using the power of marketing, caffeine, and sugar, has convinced a lot of people to spend more on their daily caffeinie fix. Worse, these people have accepted spending $3 to $5 on a daily drink as the “new normal”. Habit, and especially the subsequent changes in perspective and generally accepted price levels are very powerful tools for marketing. Cell phones costing $600 to $800 are the new normal even for people not making much more than minimum wage.
Carriers have smartened up and figured out a way to sell $800 cell phones by allowing people to buy phones with in-store financing, along with their $40 cases, $30 screen protectors, and $150 wireless Beats headphones, all on the same monthly bill to AT&T. Five years ago, people would instead pay $200-$300 to upgrade their phone every two years. Instead, the typical consumer isn’t doing the math to figure out how much they’re really spending for the phone itself on these new financing plans. Sprint, and maybe others will literally allow people to lease their cell phones in the same way that you would lease a car. People become obsessed with a low monthly payments rather than paying upfront, and they don’t really psychologically absorb how much they are spending on a product. This is just what happens when you put billion dollar corporations with stacks of marketing data, research, and AI up against a normal consumer who doesn’t understand financing and the psychological nature of their own spending habits.
Nice analysis, Julian. I also think you’re dead on about the intentional design “errors.”
Interesting call about selling your old phone online versus trading in. Have you come out pretty ahead on this?
Yeah even after paying Amazon/Ebay commission and shipping, I typically make $75 – $100 more by selling rather than trading in, on a phone that I might sell for ~$300.
I think you’d only do better by trading in if your phone is in bad condition…they’ll take it as a trade-in as long as the screen isn’t cracked, but scratches are fine.
Very cool, thanks for the info!
I pay €7,50 a month for my phone bill that gives me 1 gig of data, it’s all I need. My phone is a Moto G4 Play that I bought straight up for about €150. Over the course of three years, that comes down to a total cost of €420, or €11.60 a month.
It has plenty of storage space, the battery lasts almost 2 days, it’s smooth with most apps,
and the screen is fine (I don’t often watch videos on my phone, no need for a super sharp 4K image). The only downside is that the camera isn’t amazing, which is a tradeoff I can live with.
I’m sure plenty of people would really want a phone with a great camera (which doesn’t require $1000), but otherwise I’m sure there are a lot of people buying overpriced phones that are completely overkill for what they actually use their phone for.
I definitely agree Erik. Thanks for sharing your setup!
When we have to pay for it we rock low cost motorola phones on republic wireless. That being said I do have a new iphone 7 courtesy of my employer. I actually prefer the motorola and republic over ATT. Certain aspects of a phone that can heavily utilize my home internet connection make it of more value. Add that to no fear of ever going over on minutes or data and it worked better for me.
Very interesting direct comparison between Republic and ATT. My phone is also provided by my employer, but if it wasn’t, there’s no question I’d go Republic in a heartbeat.
Love Republic. Been with them for years, will NEVER go back to the ridiculous price gouging of Apple + Verizon. Saved us thousands already.
Awesome to hear, thanks for sharing Samantha!
I am a bit of a phone nerd. I just like reading about all the latest greatest stuff coming out. I watched the apple announcement event live even though I’ve never had an iPhone and probably never will. During the event the facial recognition screwed up and wouldn’t unlock. Pretty funny.
If someone where in the market for a phone I would suggest they get the Moto X4 which comes out in a month. Brand new costs $400, dual cameras, sweet design and the best part is you can get it with google’s phone service Project Fi. If you use less than a gig of data per month your bill is less than $30.
Apple charging $1150 for the 256GB is crazy but they are already on back order and they haven’t came out yet. People just don’t care.
Thanks for the perspective Grant. I wonder if someone waited a couple months or went for a used/refurbished Moto X4, if they could score an even better deal?
Awesome post! I love when people point out how ridiculous the smart phone game has gotten. You really don’t need that much power or that much data at all.
I actually just posted two posts on this topic: Why you don’t need an iPhone X: http://handymillennial.com/expectation_inflation/#.WedQuDspBKI
And how do it cheaper: http://handymillennial.com/how-to-buy-disposable-phones/#.WedQ2TspBKI
Thanks Handy Millennial!
In my opinion, the only thing that grounded Apple was Steve Jobs. The company isn’t the same anymore and they’re back to the practices that ensued with Steve was kicked out.. it’s all about the benjamins and I’m more of an Android fanboy now. I see the benefits, mostly in that higher price phones push the market forward and promote others to innovate and as more and more gets developed.. but not by Apple in my humble opinion. Things are getting better at a lower cost (unless you’re Apple).. slowly and the gap between the hardware and tech is getting slimmer. Maybe I’m cheap but I love my ZTE Blade Z Max.. and I put my money in other things with real value.
If apple admits to slowing down their phones why by apple.? There are lots of android phone. I bought a brand new in box lg g4 for $200. I will be trurning off software updates that could potentially slow down the phone.