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.

Screenshot 2014-09-19 08.19.01

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.

Screenshot 2014-09-19 02.20.11

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.

16 Comments

  1. ZZ

    09/19/2014 at 12:55 pm

    I’m disappointed in you. This kind of article used to be common years ago from Apple bashers. I think most of us realize that the same principles and costs apply to all smartphones bought on a contract. This is nothing new, and you’re just rehashing outdated thoughts.

    Reply

  2. rDWoh

    09/19/2014 at 2:52 pm

    Completely agree with ZZ. Most of the costs you discuss can be associated with any smartphone. Terrible article.

    Reply

  3. Duke

    09/22/2014 at 2:36 pm

    Except that the other smartphones are usually a lot cheaper than the iPhone.

    Reply

  4. Justin

    09/27/2014 at 11:51 pm

    This is the most pathetic article I have ever read. It sounds like it’s written by an 80 year old man who just wants to complain about how expensive everything is these days. I’m surprised this “article” didn’t have the words whippersnapper or sonny boy in it somewhere. Everyone knows the cost of cell phone carriers rate plans. And if you want a phone, you have to pay the plan. It doesn’t matter if it’s an iPhone, Samsung, or HTC. You must put your phone on a plan. Then to pick the largest data plan out there as a point of reference just to make it PAINFULLY obvious that it will be expensive is just tacky at best. There are no hidden costs, no surprise fees in this day and age. You get what you pay for and as long as you stay within those parameters you’re good! You can quibble about the exorbitant price of a phone that bends in your pocket all day and you might be justified in that, but NOTHING you said here is relevant as EVERYTHING you posted other than the phone and plan price is optional. It is just the ranting of an old man who can’t stand the world changing and is struggling to catch up. I truly pity all who wasted their time reading this so called article.

    Reply

  5. Dorian Grey

    10/01/2014 at 6:38 am

    The same could be said for any successful smartphone manufacturer on the market. Thank you for explaining the externalities of cell phone ownership in 2014. Truly brilliant stuff O_o

    Reply

  6. Eddie

    10/15/2014 at 2:26 pm

    My flip-phone will be my companion for as long as it lasts!

    Reply

    • Doofus

      10/19/2014 at 7:09 pm

      I guess it depends on what field you work in but I wouldn’t say that to a job interviewer.

      Reply

  7. Roy

    10/17/2014 at 4:21 am

    Excellent article for 1999!
    I would be interested to also hear your views on Fax machines, Beepers, Zip and wait…. the new 250mb trendy Zap disks!

    Reply

  8. Doofus

    10/19/2014 at 6:58 pm

    You’re right. I don’t actually use my phone for business. I’m chucking it tomorrow. I’m getting my coworkers to do the same.

    Reply

  9. Juul

    10/21/2014 at 7:27 pm

    I am surprised you didn’t mention the cost of staying with apple. Granted it’s your own choice. You buy the macbook and iPhone. They all work great together, until one day you are forced to update iTunes so it can sync your latest and greatest iPhone. What’s that? Your Mac OSX doesn’t support the latest iTunes. Time to upgrade to the latest OSX and cringe at the new sluggishness because your Mac’s hardware is now too slow to support the latest and greatest OSX (all so you could have the new iTunes just to put some songs on your iPhone). RAM update for your mac. Now its up to par, sweet. By now a newer iPhone is out and you say no my old one is still alive and works fine. No, it updates to the latest and greatest iOS now your iPhone is slugish and you just want to go back, you cant! That’s when you leave the vicious apple cycle. They’re products are too good… For their own good! In short, I agree the cost truly is thousands, over time.

    Reply

  10. Jakob

    11/06/2014 at 2:21 am

    In Australia 16GB is $869 so I think you all shouldn’t winge about $199 it’s nothing

    Reply

  11. CT

    11/06/2014 at 4:45 pm

    so sure costs are high with this situation, and yes there are people who may not be aware, but if you are going to do this where are the alternatives. Or is this like “FYI cable service is expensive but if you want it there nothing you can do” type of article.
    Pretty thorough though.

    Reply

  12. Taylor Richter

    11/12/2014 at 4:34 am

    Verizon Edge chops $25/month on More Everything plans 10 gb and higher, so you may want to recalculate your prices

    Reply

  13. Jamie

    11/12/2014 at 8:42 am

    Did my “technology is evil” idiot father wraite this article? These costs apply to ALL smartphone brands. They all require data plans and as mentioned by another writer, in the modern day business world they are essential. My company reimburses the data fees and hotspot fees because they require us to have smartphones, not that any of us wouldn’t own one anyway. All smartphones actual sticker price is over $500 outside of a plan. And taxes? Seriously? There are taxes on everything! If you’re baulking at the $199 sticker price go down to an older model which starts at $50 or if you did the exchange program when the 6 came out, it was free! As for the comment about the overall cost of Apple products( aka the Mac tax) yes, their products are more expensive, up front. With modern models the new versions of OSX can be downloaded for free. And how much do PC users spend on anti virus software per year? At least $19.99? It comes down to “overall cost to own” just like cars. My Hondas cost more too. But the one I learned to drive in at 16 is still loaned out to friends who’s much newer, much cheaper, domestic models are in the shop. And those bills are much uglier than the $19.95 basic maintenance fees on my two Accords. I had a PC when I started college, by Sophomore year I bought my first Macbook. The Macbook, from 2006, is on my lap as I type this. It has had a software update and that is it. I’ve never spent a dime on anti-virus software, and with the streaming sites I go onto for sports it should have crashed long ago. I’ve never had to run a scan disk or a defrag. The PC? It always had anti-virus software, was regularly defraged and was still parted out in 2008. That laptop cost about the same as the MacBook from what my mother has told me ( it was a high school graduation gift). Now days I buy used/ refurbished MacBooks and iMacs. More affordable and still more reliable than any PC I’ve had. I’ve taught myself how to repair damaged screens, modify memory, ect. But it’s still piece of mind that if anything goes wrong that I can’t handle myself ( like the resulting damaged caused by knocking it over onto a hardwood floor, whoops) I can take it to the manufacturer, hand it to them and have them perform the repair. A luxury I never had with my PCs.

    Reply

  14. jclhzo

    12/07/2014 at 5:09 am

    Waaaaaaaa! What a big baby! Its the consumers decision. These costs are for any brand phone so you can try and bash apple bit tthat’s silly. Don’t buy any smartphone if you don’t want to. Don’t write ignorant articles to make yourself feel important either!

    Reply

Leave a Reply

Your email address will not be published. Required fields are marked *