So, you want an iPhone, but think they are a bit too pricey? Well, here are some ways you can rationalize your ownership of an iPhone to yourself, your family, and/or your friends. How much will having an iPhone really cost you? Apple told us that you can get a 4GB iPhone for $499 or an 8GB iPhone for $599 with a two-year contract from Cingular (which is now AT&T). For our purposes we’ll just assume that you will be paying for a cell phone contract whether or not you buy an iPhone, so we won’t be factoring that in as a cost (not to mention that there is talk about iPhone buyers paying a good deal less for contracts (1, 2) than they would when buying a subsidized phone). Let’s start by talking about the raw cost.
A nice way to lessen the perceived price of something is to spread it out over time. Since the contract with AT&T is for two years, let’s assume that you have your iPhone for two years. Using those numbers, the 4GB model costs only $0.69 per day, and the 8GB costs $0.83 per day. For the daily price of an 8GB iPhone, you could drive about 1.6 miles, drink 3.5 OZ of a Starbucks frappuccino, or dig under your floormat until you find enough for a dollar menu item from McDonalds.
Doesn’t seem so bad now, but let’s see what else we can do to make it look more attractive. Since you probably will be getting a new cell phone with your next contract anyway, let’s deduct whatever that price may be from the cost of your iPhone. It’s hard to estimate how much that would cost since there is such a wide range of prices when it comes to cell phones, especially when they are subsidized by carriers, but we can pretty easily break it down into 3 categories:
Smartphones: Here are some prices from Cingular for smartphones currently on the market. If you are going to be getting a new smartphone of any type, it’s not going to end up being much more for an iPhone. Now you just have to wait and see if the iPhone will fit your needs, as there is some doubt of its usability in the business world in which smartphones primarily exist.
Feature rich, new, sleek, and stylish cell phones: If you want one of these and get it while signing a contract, you will end up paying considerably less than you would otherwise, but you will most likely end up dishing out some cash regardless. I won’t even venture a rough estimate on how much that would be, since there is such a broad range of prices and countless offers out there that probably aren’t quite what they claim to be. If you want an unlocked cell phone you will most likely end up paying market value for it. If you fit into this category, you most likely have an idea of what you are willing to spend on a phone. So take that number out of the iPhone’s price and consider the difference in price and functionality of iPhone in comparison to the others you look at.
Cell phones that are just phones: These are the phones that you get for free with a contract. Of course no cell phones nowadays are really just phones, but trying to use their extra built-in capabilities is about as practical as hitting yourself in the face with a two-by-four.
Here is what Apple’s Tim Cook has to say about this portion of the market (1, 2):
“Today the cell phone industry, a lot of people pay $0 for the cell phone. Guess why? That's what it's worth! If we offer something that has tremendous value that is sort of this thing that people didn't have in their consciousness, it was not imaginable... I think there are a bunch of people that will pay $499 or $599 and our target is clearly to hit 10 million and I would guess some of those people are paying $0 because it’s worth $0 and willing to pay a bit more because it’s worth more.”
Personally speaking, this is where I fit into the picture, and I think he’s right on…
Another good way to bring down the perceived cost of the iPhone is to realize that it is also an iPod, and that if you were to buy an iPod Nano, you would be paying $199 for a 4GB or $249 for an 8GB model. So deducting that from the price makes the additional functionality that you are getting with the iPhone seem quite cheap.
Remember that the cost per day price mentioned earlier assumes that you own your iPhone for only two years, but if everything goes well, at the end of that time you will still own an iPhone that still has functional value and probably some resale value as well. There is not much of a market for two-year old cell phones. But the iPhone may very well turn out to be an exception to that in some capacity, especially for people who want an iPhone without having to sign a two-year contract.
A nice way to lessen the perceived price of something is to spread it out over time. Since the contract with AT&T is for two years, let’s assume that you have your iPhone for two years. Using those numbers, the 4GB model costs only $0.69 per day, and the 8GB costs $0.83 per day. For the daily price of an 8GB iPhone, you could drive about 1.6 miles, drink 3.5 OZ of a Starbucks frappuccino, or dig under your floormat until you find enough for a dollar menu item from McDonalds.
Doesn’t seem so bad now, but let’s see what else we can do to make it look more attractive. Since you probably will be getting a new cell phone with your next contract anyway, let’s deduct whatever that price may be from the cost of your iPhone. It’s hard to estimate how much that would cost since there is such a wide range of prices when it comes to cell phones, especially when they are subsidized by carriers, but we can pretty easily break it down into 3 categories:
Smartphones: Here are some prices from Cingular for smartphones currently on the market. If you are going to be getting a new smartphone of any type, it’s not going to end up being much more for an iPhone. Now you just have to wait and see if the iPhone will fit your needs, as there is some doubt of its usability in the business world in which smartphones primarily exist.
Feature rich, new, sleek, and stylish cell phones: If you want one of these and get it while signing a contract, you will end up paying considerably less than you would otherwise, but you will most likely end up dishing out some cash regardless. I won’t even venture a rough estimate on how much that would be, since there is such a broad range of prices and countless offers out there that probably aren’t quite what they claim to be. If you want an unlocked cell phone you will most likely end up paying market value for it. If you fit into this category, you most likely have an idea of what you are willing to spend on a phone. So take that number out of the iPhone’s price and consider the difference in price and functionality of iPhone in comparison to the others you look at.
Cell phones that are just phones: These are the phones that you get for free with a contract. Of course no cell phones nowadays are really just phones, but trying to use their extra built-in capabilities is about as practical as hitting yourself in the face with a two-by-four.
Here is what Apple’s Tim Cook has to say about this portion of the market (1, 2):
“Today the cell phone industry, a lot of people pay $0 for the cell phone. Guess why? That's what it's worth! If we offer something that has tremendous value that is sort of this thing that people didn't have in their consciousness, it was not imaginable... I think there are a bunch of people that will pay $499 or $599 and our target is clearly to hit 10 million and I would guess some of those people are paying $0 because it’s worth $0 and willing to pay a bit more because it’s worth more.”
Personally speaking, this is where I fit into the picture, and I think he’s right on…
Another good way to bring down the perceived cost of the iPhone is to realize that it is also an iPod, and that if you were to buy an iPod Nano, you would be paying $199 for a 4GB or $249 for an 8GB model. So deducting that from the price makes the additional functionality that you are getting with the iPhone seem quite cheap.
Remember that the cost per day price mentioned earlier assumes that you own your iPhone for only two years, but if everything goes well, at the end of that time you will still own an iPhone that still has functional value and probably some resale value as well. There is not much of a market for two-year old cell phones. But the iPhone may very well turn out to be an exception to that in some capacity, especially for people who want an iPhone without having to sign a two-year contract.
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