Although most handsets that are launched by the likes of Apple, Samsung, Sony and Microsoft are usually picked up with a pay monthly contract, SIM free deals are getting more and more popular amongst consumers.
In this article we look at the true cost of contract mobile phone ownership and ask is buying outright and going with a SIM only deal a better option?
Monthly contracts vs buying outright and going with a SIM only deal
New smartphones can cost £600-700 to buy outright and as a result many people prefer a monthly contract deal because they’re able to spread their payments. The downside of monthly contracts is that over the course of the contract term, the total you pay out is much more than if you’d bought the phone outright and then signed up for a SIM only contract with the same allowance. Research shows the difference in cost over the two-year contract can be hundreds of pounds.
So besides cost, what other advantages are there for opting for a SIM free handset?
Unlike most pay monthly phone deals, SIM free handsets mean that you actually own your phone. The way that mobile phone contracts work is that networks ‘hire out’ a handset in return for a monthly commitment. However, with a SIM free mobile phone, you personally own the handset, meaning you can keep your monthly payments low. Because a SIM free deal consists of just a handset, you will need a SIM card in order to get a package of minutes, texts and megabytes of data. However, SIM only contracts are far cheaper than traditional pay monthly deals, as you only pay for your tariff. That means that your monthly outgoings are kept to a minimum, which is again great for the bank balance.
Cotermination issues and what they mean for businesses
Many mobile phone providers insist on starting a new contract every time you add a new device to your mobile agreement. This could be when a new member of staff starts working for your company or when an existing member of staff requests a new device. The result can be a number of contracts ending at different times, making it complicated when you want to change suppliers and means you may be missing out on better deals elsewhere as well as termination costs to consider.
Further advantages of buying your handset
- SIM only contracts aren’t only cheaper, they’re generally also shorter with just one-year to sign up for. This gives you more flexibility and ties you into a network for less time.
- SIM free smartphones will be completely unlocked, you can install any SIM in it. This advantage can be handy when travelling abroad. For example, you can switch out your regular SIM for a local SIM in the country you’re visiting and save money that way.
- Finally, you can of course opt for a PAYG SIM instead at any point and then just start paying for what you use without being tied into a contract at all.
The maths clearly shows the best way to keep the total cost of ownership down on a shiny new smartphone is to buy it outright and go for a SIM only deal. As an example of a worst-case scenario: if you were to have signed up to an Apple iPhone 5 two years ago, paying £10 upfront for the handset and then £47 a month for 24 months, you would have paid out £1,138, which is already considerably more than if you were to have bought the handset outright and gone SIM only. But then if you were to compound the issue further by forgetting to re-negotiate your contract for three additional months, you would have now paid out £1,279.
If you had bought the iPhone 5 for £529 and then paid £15/month for a SIM only deal, for the same 27-month period you would have paid £984. This means the difference between the two is a whopping £295 – almost half of the cost of a new handset.
Our mobile contracts can be cancelled without penalty by giving 30 days’ notice. This a cost-effective solution for businesses requiring flexible airtime contracts and overcomes coterminous contractual issues.