The vast majority of mobile network users are tied to subscriptions and contracts that span over 12 to 24 months. It is a common habit for people that want to get an expensive smartphone for cheap. For example, the iPhone 13 promotion from M1 seems like a very tempting offer yet a lot of people still feel like it may not be worth it. Being locked into a contract is seen as a disadvantage and the wrong way of getting a smartphone but is it really?
What You Are Getting With a Contract
The first thing that you can get with a contract is a smartphone. Regular users first choose what device they want to get then they look at various options for a new monthly subscription contract. This ends up becoming a package that consists of a discounted smartphone and a 12 to a 24-month subscription contract. You get a considerable discount on the device but pay a higher monthly subscription than what it would cost you to go for a contract-free subscription. In Singapore, mobile contracts have much more affordable monthly subscriptions if you do not go choose to get a smartphone as well as part of a bundle.
This type of pricing is not uncommon. It is a standard practice around the globe and not only in Singapore. A good example is the iPhone 13 promotion from M1. Operators do this to cover the costs for the device. They charge a higher subscription fee to cover the discount that you are getting on your device. Simply put, you are paying for the device in full except that you pay for it throughout your subscription contract in monthly installments that are absorbed into your monthly subscription. Mobile operators have no other way of covering the costs for the discounted device as they cannot sell products at a loss.
Why It May Be Beneficial
In real-life terms, you are highly unlikely to upgrade your existing smartphone to a newer one every 6 months or even 12 months. Most folks use the same device for a couple of years. At the same time, you do not get much by upgrading from a previous generation smartphone to the current one. For example, it may not be worth spending money on an iPhone each time a new one is launched. However, it is worth upgrading to a new device if yours is two or more generations old. If you are using an iPhone X or XR, it is well worth the investment to get the iPhone 13. This is why you will find deals such as the iPhone 13 promotion from M1 very appealing. However, buying a smartphone with cash without a contract can imply a certain financial effort. You might as well get it on a contract since you end up paying the same at the end when the contract expires and you do not have to come up with a lump sum of cash upfront. At the same time, it is highly unlikely that you will need another smartphone upgrade in the next 24 months.
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