True Cost of the iPhone 6 is Thousands, Not $199

The iPhone 6 is tempting and Apple makes it sound affordable, but the true cost of the latest iPhone is far greater than its $199 starting price. An iPhone 6 can cost thousands of dollars over a two-year contract. If you have to save up $199 to buy an iPhone 6, then you probably can’t really afford one and should consider alternatives. In this article I will explain the true cost of the iPhone 6 and why you might want to rethink buying one right away.

Most current smartphone owners are well aware of monthly service fees, but even experienced iPhone users are sometimes shocked at the true cost of their device over the life of their wireless contracts. It’s just too easy to set up automatic payments and forget about the monthly fees. For many, the only time they really think about the cost of their iPhones is when it comes time to buy a new one.

Here is where you can buy the iPhone 6 and iPhone 6 Plus on Friday.

I decided to write this article after hearing from several readers who were trying to pull together to buy an iPhone 6. Some were waiting for a paycheck on the 15th of the month so they could place a pre-order, which started on September 12th. One reader needed to make sure his paycheck cleared on the 15th, so he could pay off his maxed out credit card and have just enough available credit to buy the iPhone 6 on September 19th. I love gadgets as much as anyone, but spending your last dollar on an iPhone 6 is a boneheaded move.

Apple isn’t the most profitable consumer technology company in the world by accident. Some people will argue that any cell phone costs money, but Apple is unique in getting people to spend hundreds of dollars on accessories and subscriptions. It’s also unique in getting people to use apps and services that drive up data subscription costs.

Below is a breakdown on the true cost of the iPhone 6. I encourage you to share this with those in your life that having $199 in the bank means they can afford an iPhone 6.

The Cost of Buying the iPhone 6 Itself

While Apple and the major wireless carriers usually advertise the iPhone 6’s $199 price, that’s just the starting price for those that are signing up for a two-year contract and are eligible for an upgrade. The full retail price for the 16GB iPhone 6 is actually $649 and a lot of people are going to spend that much or more either upfront or through a payment scheme like Verizon Edge, which is essentially a payment plan that spreads the $649 cost over 20 months and allows subscribers to upgrade to the next generation iPhone after just a year.

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Those want to use the iPhone 6 to its full potential will want to avoid the 16GB versions of the iPhone 6 and iPhone 6 Plus. Apple’s selling the 64GB iPhone 6 for $299 (on contract) or $749 (full price). There’s finally a 128GB iPhone that retails for $399 (on contract) or $849 (full price). The iPhone 6 Plus carries a $100 premium, putting the 64GB version at $399 (on contract) or $849 (full price). The 128GB iPhone 6 Plus is the most expensive iPhone ever at $499 (on contract) or $949 (full price).

There are more ways than ever to pay for a new iPhone, but keep in mind that one way or another you are indeed paying the full prices above. You may not be paying full price at the time of purchase, but the difference is packed away somewhere in your wireless bill.

iPhone 6 Data Plans

There are ways to save money on monthly carrier fees, such as latching on to a family plan, but service plans generally cost much more than the cost of the iPhone 6 itself.  Carriers essentially give away talk and text services for nothing these days and focus their energy on selling buckets of data. This is where carriers make a ton of money and people in turn get bill shock.

T-Mobile and Verizon both have $50 per month plans for iPhone 6 users that don’t use a lot of data and who are willing to pay full price for their devices or spread $649 out over time. T-Mobile’s $50 per month Simple Choice Plan offers  1GB of data, unlimited talk and unlimited texts. Verizon’s $50 per month plans includes 2GB of data per month.

Buying an iPhone 6 on either of the $50 per month T-Mobile or Verizon plans adds up to about $2,000 over  a two-year period.  If you need more than 2GB of data, you’re going to have to spend considerably more. As you can see in the below chart, the 16GB iPhone 6 on a 10GB Verizon plan will cost $3,410 over two years.

Verizon EDGE vs Verizon Contract Pricing

Verizon PlanDue at PurchaseActivation FeeEdge PaymentsMonthly ServiceTotal Cost 1st YearTotal Cost Two Years/ End of Payments
Verizon Contract, 1GB Single Line$199.99$40$0$60$960$1,680
Verizon Edge, 1GB Single Line$0$0$27.08$45$865$1,730
Verizon Contract, 2GB Single Line$199.99$40$0.00$75$1,140$2,040
Verizon Edge, 2GB Single Line$0$0$27.08$60$1,045$2,090
Verizon Contract, 2GB More Everything$199.99$40$0$80$1,200$2,160
Verizon Edge, 2GB More Everything$0$0$27.08$60$1,045$2,090
Verizon Contract, 4GB More Everything$199.99$40$0.00$100$1,440$2,640
Verizon Edge, 4GB More Everything$0$0$27.08$85$1,345$2,690
Verizon Contract, 6GB More Everything$199.99$40$0$110$1,560$2,880
Verizon Edge, 6GB More Everything$0$0$27.08$85$1,345$2,690
Verizon Contract, 10GB More Everything$199.99$40$0.00$140$1,920$3,600
Verizon Edge, 10GB More Everything$0$0$27.08$115$1,705$3,410

Verizon doesn’t offer unlimited data plans any more, but it does offer a 50GB plan that costs $415 per month or $9,960 over the two-year agreement.

Taxes, Taxes Everywhere

The above chart doesn’t include tax taxes and regulatory fees and those are everywhere you turn. In some states, including California and Nevada,  Apple is required to collect tax on the full retail price of the phone, even if you’re paying the $199 entry price. That means you may have to pay about $60 in taxes on a $199 iPhone at the point of purchase.

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And don’t forget about the taxes on the monthly cell phone  bill. On a single line plan, expect to pay about $10 per month or so, which is another $240 over a two-year contract.

APPLECARE-plus, Extended Warranties and Insurance

If you want to make sure your iPhone 6 will survive for two or more years, it’s a good idea to buy some sort of extended warranty and/or protection plan. AppleCare+ is the most popular and it will set you back another $99. It extends the warranty by a year and offers damage protection that makes it easy to swap out your iPhone for a new device after paying a deductible. The one thing that AppleCare+ doesn’t protect against is loss or theft. For that you’ll need something like Verizon’s Wireless Protection service, which costs another $8 per month.

iPhone 6 Cases and Accessories

iPhone accessories cost quite a bit over time too. Before you know it you’ll have a drawer full of Lightning charging cables, cases and other accessories. It’s pretty easy to spend $30 to $60 on an iPhone case and at some point in the next two years you’ll need a $19 Lightning cable.  But those accessories are cheap compared to the iPhone compatible speaker systems and things you’d probably buy if they weren’t made for iPhones.

Apple iCloud

icloud-logoApple offers 5GB of free storage for users, but charges monthly fees for those who want to back up multiple devices to iCloud or manage a ton of media. Prices range from $.99 per month for 20GB of storage to $19.99 per month for 1TB of storage. On the low end, users will spend $24 over two years, with power users paying almost $480 over two years. iCloud backups are the best way to capture regular backups and you’ll need to upgrade to a paid iCloud account to do that.

iPhone Apps, Movies, Games and More

A lot of people swear that they’ll never waste money on iTunes and App store purchases, but the iPhone makes too easy to fritter away pocket money on apps and games. There are a to of free apps too, but there’s a reason why most of the top-grossing apps are ‘free’. These pps generally have loads of in-app purchases so you can spend money on unlocking levels and virtual race cars. Sure, you could get away without paying a dime for any apps or iTunes content for the next two years, but then you won’t be using your iPhone 6 to its full potential.