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iPhone 5 – Buying outright vs Buying on a plan

  • TPG has nanoSIM ready to go
  • Optus hits the sweet spot overall
  • How to avoid a 24 month commitment
Written by Adam Wajnberg

Let’s avoid the religiosity here. Whether you think the iPhone 5 is the greatest thing ever, a laughable excuse next to more powerful Android phones or a mediocre update of what’s still the best phone money can buy, there’s no denying that it’s going to sell very, very well. And that’s a win for technology enthusiasts, regardless of their leanings – it will force down prices for other phones, and contribute to the mad innovation scramble to ‘Get Apple’, already well in play. Huzzah for the world’s largest company, a firm full of nerds trying to push the boundaries of elegant technology and design.

              iphone 5

Now, the dismal science: the economics of buying an iPhone. Much has changed in the 12 months since the 4S debuted; buying a mobile outright was still a niche exercise up until recently. But with the emergence of Mobile Virtual Network Operators (MVNOs) mostly using the Optus network with plans that put Optus’ retail service to shame, buying a phone outright is almost necessary.

SIM-only plans also tend to offer a greater amount of security from bill shock, with fewer exclusions, wider credit limits (often doing away with ‘caps’ altogether) and the freedom of a month-to-month agreement. If a customer is unhappy, they can actually use the threat of walking away to get a reasonable conclusion, as opposed to the ‘no worries, do what you want, but your phone is locked and you’ll have to pay a huge disconnection fee” brush off.
Over the last 12 months, the cost of Android superphones have plummeted, both on plan and outright. Some of this is due to the persistent popularity of the iPhone – even in the quarter leading up to the iPhone 5, Apple still sold more than 20 million iPhone 4S – but more of it is due to the huge and barely differentiated Android market. Sony, Motorola and LG all make superb handsets that are 95% as good as Samsung and HTC phones, and that ubiquity cheapens the overall brand.

Click here to check out Dodo plans – or call them on 1300 136 793 for excellent deals on outright Android headsets!

But the iPhone exists in its only little universe. Despite costing a packet ($800 - $1000) with roughly 0% chance of being discounted anywhere, it will still attract lines ahead of its 8am launch on Friday the 21st of September. When buying on a plan, most models are already on a 4 week backlog or sold out for the time being.


                                            3g vs 4g

There’s another issue here too – only Virgin, Optus and Telstra will have 4G available from the get-go. Vodafone will have 3G+, with 4G to come next year. And only a few carriers will actually have the new nano-SIM standard needed for iPhone 5. Amaysim, iiNet and other MVNOs have so far extimated 8 – 10 weeks to get in nano-SIMs, just to use the phone on 3G. TPG has said they’ll have nano-SIMs available for tomorrow’s release. How they did that is anyone’s guess.

Click here to check out TPG plans

Click here to sign up for iPhone 5 on plan from Vodafone

Quick and Dirty comparison for buying iPhone 5 on a 2 year contract, for plans between $50 and $100

We’ve limited the plans to this range because anything smaller will just be a trap to overpay, and anything bigger will just be a scaled up version of a $100 plan. And to reduce overall confusion – this is the range most buyers will focus on.

compare iphone 5 plans 24 month contract

From the above, it’s very hard to guage the best value plan, even with broad assumptions. The Virgin plans? They don’t include calls to 13/1300 numbers. So an hour long wait for customer service with your bank could cost you an extra $50 or so on your bill. Little traps like that are the bane of mobile users everywhere.

Vodafone’s plans are particularly disappointing. They manage to somehow be around the same price, only more confusing than the Optus and Telstra plans – and that’s without 4G right now! Not to mention that every iPhone 5, ever model, every colour, on every network…is already sold out. I personally predicted that they would pull something out of the hat with iPhone 5 to claw back some of the market share they've lost, but they've failed to come through :(

Buying Outright

Assuming that Apple has put aside separate stock for its own retail stores, here’s a breakdown of what someone buying a phone outright would pay with Amaysim, Dodo and TPG, three of the biggest SIM-only providers.

To be a little cheeky, we’ve put in an extra column. A big issue with buying a phone on a 2 year plan is that you miss a generation of the hardware – and that’s with iPhone, with its yearly update schedule. Samsung seems to be on a 6-8 month schedule for updates, meaning 3 or 4 generations have passed since you started your 2 year contract!

The aftermarket for Android phones is a little weak, but not so for iPhones. Secondhand, last-gen iPhones can usually attract about 50% of the original price on resale – even the iPhone 4 still sells on eBay for $200 - $400!

So the last column looks at what it would cost an enterprising iPhone 5 owner who buys their phone outright and sells it for half that price, 12 months later- when the iPhone 6 (or 5S, or whatever) comes out and we start all of this again.

Call Amaysim on 1300 302 942

Call Dodo on 1300 136 793

Interested in TPG? Call us on 1300 106 571 to sign up – we’re based in Australia!

compare iphone 5 plans outright

Again, deciding which of this SIM only providers to go with is a toss up. All three use the Optus Network, as do a vast majority of MVNOs. The Amaysim customer service team is based in Australia, whereas Dodo and TPG are offshored. The Amaysim and Dodo plans are much more “pay it and don’t worry” than the TPG plan, which can still bite you for overuse.

The Dodo plan has even more value than the remarkable Amaysim plan. But the TPG plan is available right now, whereas Amaysim is 2 months away (maybe sooner if things change) and Dodo hasn’t given any timeframe yet.

So much to choose from! But if you can be patient and have the money upfront, our top recommendation is absolutely the Dodo plan, followed by Amaysim.
If you have the money but not the patience, go TPG.

If you don’t have the money upfront, then the Optus Medium plan is the sweet spot for buying on contract. It provides a reasonable amount of value with few surprises or bill shock ‘traps’.

Call Optus on 1300 137 897


Buying an iPhone, or any phone these days outright, and then going with an innovative SIM-only provider is absolutely our top recommendation for the time being. It is painful and difficult for many people to pay that amount upfront, but the long term benefits are huge- you can control the customer service interaction, you get a much simpler and valuable plan for less money, and you have more freedom to upgrade every year if you’re comfortable selling phones on eBay, Gumtree and other popular exchanges.

We like Amaysim overall for their excellent value, locally based customer service and excellent iPhone and Android apps for keeping track of your usage. Dodo is good too, especially if you make any international calls.

The TPG plan packs a lot of value, but we’re always advising caution for any cap plan, regardless of how much value it has on the surface- stay informed on how much you’re using, and use any tools (online account, apps) provided.


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