Cell Phone Prices Vary by Retailer

We’ll preface this tip with an example.     Let’s say you wanted to sign up for a 2 line AT&T family plan today. Specifically, you are going to get the AT&T Family Talk 700 plan ($69.99/month).with a BlackBerry Bold 9700 for each line.     Before you buy, you decide to check the price from 3 websites:   AT&T, BestBuy and MyRatePlan.  Here’s what you would see for the cost of two phones:

• AT&T:                 $399.98
• Best Buy             $199.98
• MyRatePlan        $0.00

Prices checked 5/17/2010

That’s right, just based on where you bought, you could spend up to an extra $400 (enough to pay for more than 5 months of service on the $69.99 family plan) at the outset, for the exact same phones and rate plan.    Here are some more examples (all for a single line of service).

The point is not that we have the low price (we don’t even sell the phones ourselves– just try and point visitors to our site to a low online price), but that there can be a tremendous difference in price across retailers.  Furthermore:

• The hierarchy of pricing shown above tends to hold across devices:   online 3rd party retailer is cheaper than 3rd party offline retailer which is cheaper than buying directly from the carrier; the carrier prices tend to be the same whether online or offline.
• Regardless of where you buy, the rate plans (e.g., the 700 minute family plan) are the same, because those are determined by the carrier
• Signing up for service from a 3rd party is essentially the same as buying directly from the carrier:  there is a phone component and a plan component.    When you don’t buy directly from the carrier, the best way to think about it is that the retailer is selling you a phone at a discount in exchange for getting you to subscribe to one of the carrier’s authorized plans.  The carrier then pays the retailer a commission.  If the retailer wants to make a profit, that commission needs to more than cover the discount given to you plus their overhead.
• Since online selling is impersonal (i.e., no salesperson), the only real differentiator between websites is the price of the phone.   Online only companies tend to have lower overhead, as well.  These two factors combine to make online the best place to get the best price on a new phone.
• The biggest price discrepancies occur for phones purchased with a rate plan (either new service or a contract renewal).   There are price differentials across retailers for ‘phone only’ upgrades, but the differences are much smaller since there are no carrier commissions:  The retailer will only make a profit if they sell the phone for higher than its cost.

To compare phones and see some low online prices, use our interactive phonefinder.

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