Every once in a while at work, I would get an elderly customer walking in for the occasional double AA or AAA battery refill. During the checkout, I would ask them how their cellphone is working out for them or if they are ready for a new phone. More often than I would like, the customer tells me that they still had the same phone for 4 or 5 years. On the rare occasion, the customer would inform me that they save so much money by not paying for a new phone every two years and that anyone who does upgrade once their upgrade is eligible is just foolish. When this occurs, I would just smile condescendingly to them because I know no matter how much I try to argue with them, they won’t change their mind. On this occasion, the customer is wrong because sitting on a phone upgrade will not benefit you unless your thinking of changing carriers. Consider the following next time you are thinking of not upgrading as soon as you are eligible.
Reason 1: You are throwing away money!
If you remember from my earlier blog on the True Cost of an Upgrade, I mentioned that the reason contract cell phone carriers offer Smartphones that normally cost $700 for $200 is because they give customers a subsidy whenever they renew their two-year contract. Don’t fool yourself into thinking that wireless carriers are losing money. They offset their subsidy cost by charging you higher monthly rates above their operating costs. Let us take Sprint for example. One can pay $79.99 per month on a contract plan with 450 anytime minutes, unlimited text and unlimited data or one can pay for the same service (Boost uses the same towers as Sprint) on Boost Mobile (which includes unlimited minutes) for only $55 (we are not factoring the savings from Boost’s Shrinkage). I don’t exactly know Sprint’s operating cost per individual plan but for the sake of argument let us assume the $25 difference goes toward paying back the subsidy. In a standard two-year contract, this means that you pay an additional $600 if you went for Sprint than Boost Mobile (this usually evens out the subsidy). Do the people who don’t renew their contracts get their bill reduced? No. If you chose not to renew your contract you still get to pay the exact amount as the other guy who does renew their contract. So what should you do? If you like to keep the same service, but don’t want a new phone then upgrade to a free new phone, ask your wireless consultant to switch back your number to your old handset, and either keep the new phone as a back up phone or sell the phone to someone else. If you want wireless service but don’t like contracts then seriously consider switching to a Pre-paid cell phone service like Boost Mobile or Radioshack’s Pre-paid service.
Reason 2: Technology Upgrades Very Fast
Technology changes very fast. Like ridiculously fast. Technology like LTE makes old download speeds painful to watch. If your provider offers LTE and you are still running 3G, take advantage of the LTE since you are paying for the same service. Sitting on your upgrade because you want the latest and fastest cell phone? Don’t. Just don’t. Smartphones/cell phones are being improved all the time. If you are waiting to get that perfect phone with the massive storage and awesome camera then you will be waiting forever. Better cameras are being installed, larger memory is always being added. Do yourself the favor of upgrading to latest gadget since no matter what you will experience buyer remorse.
Reason 3: BBBBBBBattery!
Batteries don’t last forever. Even if you let your battery die completely and then recharge your battery fully every time, your battery will eventually stop holding a good charge. Smartphone battery will eventually lose their potential after a certain amount of charges. Some phone insurances gives you a free battery in their plan. Most people don’t buy the insurance and as a result they end up paying for their own battery (average battery for a smartphone is around $40 in a retail store). Rather than pay for a new battery, why not just upgrade to a free phone and pay the upgrade fee next cycle? Not only will you get a new gadget to play around with, but you also won’t have to worry about your battery dying on you.
Have other reasons of why people shouldn’t sit on an upgrade? Or do you have arguments against renewing two-year contracts? Let me know by commenting below.