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Is it better to buy a phone outright or sign up to a plan?

  • More control if you buy a phone outright
  • Contracts may have hidden fees
  • But cap plans still good for buying brand new smartphones like the iPhone
Written by Mikaella Clements

It seems like an obvious question. Buying a phone on a contract allows us to get a shiny new piece of technology for what feels like a very low cost, and there are definitely some great deals out there that can help you get a plan that suits your needs with a phone for a very reasonable hardware price per month.

Click here for Optus's great cap plans.

But what about those of us who are very light users? Or those who are planning to go overseas soon? Or those who are hesitant to sign up for a long contract? Is going on a cap plan still the best choice?

There are definitely some factors to consider before you sign up for a plan. There are other options out there for those of us who want to be able to buy a phone outright but might not be able to shell out $800 for a brand new handset straightaway – putting things on lay-by, seeing if a store will sell you a phone under a credit agreement with monthly payments, or even looking online on eBay and Gumtree and other sites to see if you can find a handset that's either second-hand or cheaper than retail. We particularly recommend Dodo, who sell a lot of handsets for reasonable prices without asking you to go on a contract. Call them now on 1300 136 793.


smartphone power!

And what advantages are we getting out of doing that and then paying for our mobile plan and our handset separately? Let's take a look at some of the pitfalls of the mobile contract.


  1. Hidden costs
  2. 24 month wait between phone upgrades
  3. Overall cost


Hidden costs

Mobile phone plans can be deceptively expensive. We've talked about the hidden expenses of 'unlimited' plans before. Often 13/1800 numbers are not covered or are charged at a significantly higher rate, and the amazing $500!! we see advertised as part of the call plan might in fact only be for calling other people using the same provider.

The real danger, though, lies in the charges you'll get when you go over your data limit. Many customers use their mobile plans to access the internet, but it's important to remember that you're not getting anywhere near the same amount of GBs you'll get on an ADSL connection. A mobile phone shouldn't be used in the same way you'd use your desktop PC – watching YouTube videos, browsing flash-heavy sites, sometimes even downloading big apps.

(While most apps rarely use more than 5MBs when you download them, a big app like TomTom can use up to 1.5GB – and apps like TomTom and TuneIn radio will continue to eat up a lot of your data every time you use them. It's a good idea to only download or use apps like these when you can log your phone into a wireless ADSL connection.)

Picking an affordable plan with data that will suit your needs is difficult, and it can be shocking to pick up a sudden extra $300 from your excess data usage. That's why we recommend avoiding data usage on your plan in favour of using WiFi ADSL whenever possible, or saving flash-heavy pages for viewing when you get back home.

If you want to avoid hidden costs, steer away from contracts that give you the phone with them. While some ISPs are better than others, it's better to buy a phone outright and then sign up with an intensely transparent provider like Amaysim.

Amaysim's Unlimited Post-Paid SIM is one of the best plans out there. For $39.90 per month, you're getting a contract that is guaranteed to be unlimited – including 13/1800 numbers. You also get 4GB of data – more than enough for your mobile needs. And the plan has no contract, meaning that you're not stuck for twenty-four months only to find that the coverage isn't great in your area. Call Amaysim today on 1300 791 895.

24 month wait between phone upgrades

If you're a tech head who loves the latest gadgets, it might drive you crazy to be stuck with your all-too-soon defunct mobile for the next two years. In this case, buying a mobile outright and picking a plan like Amaysim's or TPG's, where you are only buying a SIM, might be a good idea. That way you can upgrade whenever you want, and switch your SIM with it.

However, upgrading phones constantly gets expensive! You might instead want to try a twelve month contract, as they are now beginning to come into the marketplace.

Vodafone offers a $29 Cap that offers a range of great phones, including the new Nokia Lumia phones and latest Samsung Android phones, on a twelve month contract. It includes $180 monthly credit and 200MB of data, along with unlimited social network sites. Give us a call to find out more on 1300 106 571.

Overall cost

Phone price comparison chart

As you can see, in some situations it may be cheaper to buy a phone on a plan, while in others it makes more sense to buy a phone outright. Let's break the chart down into logical courses of action.

If you want to go on a particular plan, you may as well get the phone with it. It would be much more expensive to buy the iPhone outright and then sign up for the plan than to just get the iPhone as a component – and a persuasive one! – of the great Optus $59 Cap.

If you are attracted to the short contracts and more abundant features of plans like the Amaysim Unlimited Cap, it's cheaper to buy your own phone and have total control over your contract.

It's also worth noting that we got the price for buying an iPhone outright off the Apple website, and it's one of the higher range smartphones. Buying an iPhone in a retail store, secondhand, or off Ebay would significantly reduce the price, and other smartphones are also much cheaper – you could find something for as low as $200. We have some information to help you buy a phone online here.

In conclusion: it really is about you and your own personal needs! For some people, going on a plan to buy your phone is the best way to do things, in terms of ease and expense. But a lot of people don't realise the option of buying a phone outright exists, and for those of you who would like to escape long contracts and hidden fees and take advantages of some great deals like Amaysim's Unlimited SIM, buying a phone outright is a great way to go.

If you have any other questions or would like more information on who to buy a phone from and where to get your plan, please don't hesitate to call us on 1300 850 518.


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