No contract no-brainer
Hi All.
I did the calculation a little while ago and if you happen to be able to afford the phone sim-free it makes perfect sense to buy it outright.
Let's take the total cost of ownership approach:
Buy a 12 month contract as above and you're committed to paying 12x £41 = £492 and add the £309 you paid for the phone gives us £801.
Or buy the iPhone 4s sim-free direct from Apple for £499 and go to the same network (but using giffgaff as the provider) and pay £10 a month (if, like me you actually use reliably under 250mins /month though other 'goody bags' are available) plus all the texts and internet you can eat. this works out at £120 over the year for a TCO of £619. Even if you're regularly using 400mins a month your TCO becomes £679, or at 800min/month it becomes £739. In any case you're not committed to any contract at all and you've saved a bundle.
To take an existing example, as close as I can. On O2 a 12 month 300 min contract with a 4gs 16gb, the phone costs £299, and the contract costs 12x(£31+6) = £444 for a TCO of £743
I could buy the same phone unlocked from Apple for £499 and spend £120 on an very nearly equivalent contract for a TCO of £619 with no commitment, as well as other nice parts of an unlocked phone like being able to use with a foreign sim if abroad or lend it to mates.
There may be a few examples where the contract works in your favour but generally speaking it won't. Even taking the 24 month 300min contract gives a TCO of £962 vs £739, (not counting the apple warranty only lasting 12 months - a trap I've fallen into before), and apple will probably have released the iPhone 6 or 5s by that point, so it'll be starting to look slow.
There are other contract providers that do these sorts of sim only deals - I'm just using giffgaff as the example because I'm currently with them and I've been pretty happy thus far. Most of the big providers have something similar if a little more expensive, and if going for a small provider (there's a list of them here: http://en.wikipedia.org/wiki/List_of_mobile_network_operators_of_Europe#United_Kingdom) makes sure they support HSPA+.
Hope that helps anyone considering entering a contract.
p.s. would be great if a Reg hack could write an article on contract vs non-contract...