The world of consumer technology moves fast. A steady stream of new models is unleashed on the market as manufacturers do their best to convince us of the need to upgrade. Nowhere is this truer than in the smartphone market. If your phone is a couple of years old then the latest models will eclipse your current specs. Most of us choose to take phones for a small or no upfront fee, but frustratingly this locks us into two year contracts. By the final few months it can be torturous watching that conveyer belt of shiny new tech and having to wait patiently for upgrade day.
It seems that the major service providers understand this quandary and, of course, they want to sell more phones and upsell your service. The result is a new wave of early upgrade deals. If that scuffed, year-old smartphone in your pocket is no longer making your heart sing what’s the cost of an early upgrade? We looked at the offers from the major UK players (correct at the time of writing) to see what your options are.
When you buy a new phone on a two-year contract you are really entering into a credit agreement. You may end up paying more for your phone in repayments than you would if you bought it outright at the start, but the true cost is muddied because service and repayments are lumped together. O2 Refresh separates them, so you have a monthly service cost (Airtime Plan) and a monthly phone cost (Phone Plan).
The Phone Plan is essentially a monthly repayment plan to buy the phone on interest free credit. You can pay off the remaining balance at any time and get a new phone, or you can keep your phone after you’ve paid the 24 monthly installments and your bill will just consist of your Airtime Plan.
The advantage with this approach is that you only ever pay the original price of the phone and you can choose to pay off the remaining cost at any time. If the service and phone cost are lumped into one 24 month contract then paying it off early will be a lot more expensive than if you have the option to just pay off the phone. For example, if you pay off a £32 per month contract after seven months, on the old system you would pay the remaining 17 months, so 17 x £32 = £544. If you just paid off the £15 per month phone plan then you would pay 17 x £15 = £255.
According to O2’s F.A.Q. you are not locked into the Airtime Plan, which means that you can pay your phone off early and leave without having to pay the remainder of your Airtime Plan. This makes it a pretty attractive offer. If you’re currently stuck in a contract on O2 they will give you a 25% discount on your remaining monthly payments if you want to pay it off and switch to O2 Refresh.
Everything Everywhere or EE is actually a partnership between T-Mobile and Orange. It is rolling out the first 4G LTE network in the UK and making a push to get people to sign up. Consequently you can get a deal if you’re a T-Mobile or Orange customer willing to switch to EE. The Early Upgrade option is available if you are at least six months into a contract with T-Mobile or Orange. If you switch to EE then they’ll give you a 33% discount on the remaining cost of your contract. If you stick with Orange or T-Mobile then they’ll give you a 15% discount on the remaining cost of your contract.
If you’re seven months into your £32 per month contract then it will cost you 17 x £32 = £544 with 33% off = £364.48 if you switch to a new contract and phone on EE.
If you want to stick with T-Mobile or Orange then it will be 17 x £32 = £544 with 15% off = £462.40 if you take a new phone and contract with T-Mobile or Orange.
Vodafone and Three
There are no special upgrade early offers on Vodafone or Three right now, although you can contact them and find out about the cost. If you are near the end of your contract you can often get a good deal and upgrade early. They are also more likely to cut some kind of deal with you if you are threatening to leave. In general the longer you’ve been a customer the more likely they are to offer discounts to retain you.
Offsetting the cost
Remember that you can always sell your old phone to offset any upfront cost for a new phone or your remaining contract bill. You should also know that the service providers rarely offer the best prices for trade-ins.
The closer you are to the end of your contract the cheaper it will be to upgrade, but it’s always worth trying to negotiate a better deal. Don’t accept the first offer, they usually have some wiggle room and you can sometimes secure extra discounts or better deals if you negotiate. Threatening to leave can work well if you get put through to Customer Retentions as they seem to have more power to offer good deals in order to keep you.