Paying an up front cost for phone

[gt37]

Why do all the phones advertised on the website include an up front cost? The price of the of the contract pays well over the asking price for the phone. I'm due to upgrade my phone but won't due to this additional cost. Seems to be only recently/ last 12 months this has started.

[BandOfBrothers]

Hi @gt37

It's an upfront cost that is typically attached to a flagship phone / expensive phone that I assume is added to offset the cost of the Network purchasing it from the manufacturer. 

On a New Contract I think it's also because the Network is taking a risk in providing a phone that can cost £500-£600+ and hopes the person pays their bills etc. In some respects this could be applied to an upgrade too.

The Vodafone Retention Department maybe able to broker a deal but from past experience they'll have a set list of models of phones to offer but may also be able to make a deal on the tariff amount or text,minutes or data allowances on offer. 

The longer a phone is available then sometimes that cost is reduced or removed. 

A person has a choice to either want a new to the line phone with upfront cost, or maybe last years model with less or no upfront cost. 

The practice of adding an upfront handset cost isn't something new and has been applied for years which all the Networks do. 

Another option would be to buy a phone outright and then drop onto a Sim Only type contract or Payg which can bring savings in the long run. I appreciate disposable income has to be considered especially for these expensive phones. 

[jeffkinn]

---

@gt37 wrote:

Why do all the phones advertised on the website include an up front cost? The price of the of the contract pays well over the asking price for the phone. I'm due to upgrade my phone but won't due to this additional cost. Seems to be only recently/ last 12 months this has started.

---

With a contract you aren't only paying for a phone, but for the service you are receiving and the fact that the networks have invested billions of pounds into their infrastructure. Also they need to make a profit.

The upfront cost helps to reduce the monthly payments and, as @BandOfBrothers has said, to reduce their risk of not getting all of the money.

[hrym]

Upfront costs usually apply to lower-priced tarriffs and offset the lower return to the network.   If you take out the SIM-only cost of the tarriff, then multiply the remainder by the contract period (typically 24 months) and add in the upfront cost, that'll give you the true cost of the device.   In some cases, it compares favourably with an outright purchase elsewhere and, in addition, you're getting it on monthly instalments.   If you used a credit card for an outright purchase and paid the balance off over the same period, you'd have to factor in interest as well.

[CeciliaCiot144]

So, if the company e.g. Vodafone says that the upfront cost £49.99, can I pay more to reduce my monthly contract payment?

Or do I have to pay £49.99, nothing more nothing less.

[AnnS]

Hi @CeciliaCiot144

No, it doesn't work like that.

The monthly line rental charges for the contract are the same for all customers on the same tariff that won't change.   Depending on the tariff the upfront charge varies. 

If you don't want any upfront charge, buy the phone SIM free and take a SIM only contract.

[Tsathoggua]

If you're after a real premium phone (Galaxy S9, iPhone X) there doesn't seem to be any escape from this. If not, then the simple answer is "don't get it from a network who insist on adding arbitrary charges."