The average cell phone costs $471 and the average premium phone costs over $1000! According to a Time Magazine poll, 84% of people surveyed said they couldn’t go a single day without their mobile device in hand. Given how important cell phones are, and how expensive they’ve become, how does one save money on cell phones?
Hardware as a Service
While a cell phone may seem like a one-time purchase, it’s getting harder and harder to treat it as one. Instead of being something you make last until it finally dies, the prevalent attitude about smartphones is to upgrade sooner rather than later. With the advent of the smartphone, the cell phone has grown to become a “hardware as a service model”.
What do I mean by that? Two things: 1) Each new model of smartphone comes with new features you may or may not want (Which you have to upgrade to get), and 2) manufacturers only support a certain model for so many years. It seems like every phone these days is advertised not by processing power or battery life, but by its better camera, new ID technology, and storage. These new features may be useful to you, but whether or not they are is irrelevant. The problem of “hardware as a service model” comes from the second point. Let’s look at an example.
In 2018 Google released a shiny new Google Pixel 3. With it came Android 9 Pie. The next year when Google released Android 10, the Pixel 3 was able to update and install it. Android 10 came with new software features like Dark Mode. It also came with new security patches. Google has promised support for the Pixel 3 until October of 2021. That means the Pixel 3 will be able to update to Android 11 and 12 and get security updates until October of this year.
But what happens after October 2021? Well if you have a Pixel 3, it means you won’t get any new software features that come with new versions of Android. For better or for worse you may want those new features or you may not. But more important than the new features, you will also miss out on the security patches that that come with Android updates.
Technical Security
I’ve personally never needed the newest smartphone features. I really just want my phone to be able to call people and surf the internet, but I’m very concerned with having the latest security updates. With more and more of our lives being online, technical security is a very real concern. In the US in the past 5 years there have been 6,469 data breaches totaling over a billion (1,026,000,000) records exposed. That’s three per person just in the last 5 years. And as I am morally against bad statistics, I am duty bound to remind you that since that includes children that are too young to have any online presence, that number is likely higher per person.
These stolen records are usually credit card numbers, usernames, and passwords. The kicker in these data breaches is that nearly all of them could have been easily avoided by installing security updates. In these cases hackers exploited vulnerabilities in software that was either not updated or no longer supported by the manufacturer. This is why it is imperative that you update software on your electronic devices and that includes smartphones.
If your smartphone manufacturer no longer supports your smartphone, you are not getting security updates. Because of this, your phone will become increasingly vulnerable to the malicious intentions of bad actors.
To Upgrade or Not
All this to say that though in theory people don’t have to buy new cell phones regularly, in practice upgrading periodically is a necessity. In 2020 the average phone sold in North America cost $471 and increased by 7% annually. And as of 2018 the average smartphone user waited 24.7 months before upgrading. This comes out to an annual expenditure of $228.83/year on cell phones.
So the average American spends $228.83/year on cell phones. $229 a year doesn’t seem like a lot of money but if you put that money into the stock market making 7% interesting, assuming a 7% increase in price, after 20 years that’s $16,536.93. In 2017 the iPhone X was released at a starting price of $1000. And as of 2020 the average premium smartphone is now over $1000. If you bought the flagship iPhone model every year for 20 years, it would set you back $72,330.55! This number, of course, is assuming a 7% increase in price.
That is the cost of buying new smartphones. Obviously very few people buy a new iPhone every year, but the average American is spending hundreds of dollars a year, and losing out on thousands in potential savings. How can they possibly save money on cell phones?
iPhone or Android?
I know this seems counterintuitive, but buying an iPhone is the better financial decision. I say this because, while Android phones are cheaper, Google only supports them for a couple years. They’ve promised to support their own phones, the Pixel line, for three years. Other high end Android phones, like the Samsung Galaxy line, usually get 2 years, and some of the cheaper android phones don’t get any updates. Google is working to change that because of security risks, but they won’t ever get more than 2 years of updates.
Apple on the other hand doesn’t promise any specific support window, but they’ve consistently supported phone models for 5-6 years. That means that if you pay $800 for a new iPhone that lasts you 5 years you’re spending $160/year on a smartphone. On the other hand if you buy a budget $400 Android phone that is supported for 2 years, you’re spending $200/year on a smartphone. As you can see in this case the iPhone is a cheaper option even though it initially costs twice as much.
As a rule of thumb I like to keep my cell phone budget to less than $100/year. If I spend $200 on a smartphone I hope to keep it at least 2 years. But I won’t keep a smartphone past its support window. This is the same reason I don’t use Windows XP: using software that’s no longer supported is a security disaster waiting to happen. For example I spent $190 on an iPhone 7 in fall of 2019. It should continue to get security updates for at least another year. If Apple stops supporting it in fall of 2022 then it would have cost me $63/year to use this phone.
Buy Used
The easiest way to save money on cell phones is the same as saving money on cars: Don’t buy a new phone. There are many ways to purchase used smartphones. Aside from general sites like Craigslist or eBay, there are several sites specifically for buying and selling used cell phones.
Swappa
Swappa is a site where sellers can list their old phones and buyers can buy from them directly. In that way it’s like eBay, but Swappa has specific rules such as the phone has to be working, clean, and not blacklisted from any carrier. I originally used them because they had a deal with Ting that would guarantee with phones worked with Ting and would come with a free SIM card. They are also usually the best deal I can find.
Swappa is mostly for phones, but they also have computers, tablets, and video games. They currently have the iPhone SE 2nd Gen starting around $215. And since the SE will probably be supported for another 3-4 years, that comes out to only spending $70/year on an iPhone!
Gazelle
Gazelle is a site that buys old smartphones, refurbishes them and then sells them at a discount. I bought my wife an iPhone SE 2nd Gen for $265 last fall. The SE 2 was new that year at $400 so $265 was a great deal. If Apple supports it for 5 years, that comes out to $53/year. Nearly half of my phone budget! I didn’t actually have a good experience with Gazelle or their customer service team, but I did get a great deal.
Back Market
Back Market is another site that buys old smartphones and refurbishes them for sale. I’ve never used it, but I’ve heard good things.
Conclusion
In conclusion, smartphones are hardware as a service. Because they shouldn’t be used outside of their support window, customers need to regularly upgrade to stay safe. Because of this you can’t just buy a cheap phone and use it forever like you can most things. This is why I propose the $100/year cell phone budget. I aim to spend no more than $100/year on cell phones.
This means I buy my phones used and then keep them until their manufacturer no longer supports them. Furthermore I pretty much exclusively buy iPhones because Apple supports their phones much longer than Google does. That said I don’t really have brand loyalty. I would by an Android if it were a better financial decision but for now I believe iPhones are the better deal on a per year basis. I recommend, as always, that you do your research.
What do you think? Which phones do you use? How much do you spend per year on cell phones? Let us know in the comments below!
