VZ Edge math

[Clocks]

Maybe this is the carrier's goal all along, but it seems a lot of blogs are just having trouble figuring out the real cost here. I'm trying to figure out who would be better off at the end of 24 months: someone on VZ edge or someone going the subsidized/contract route?

Assume a new device costs $649

You get it on VZ Edge and you start paying $27.04/m. Then after 12 months you trade it in and get a new phone - your existing debt is wipe out and you start over with 24 new monthly payments at $27.04 per month. At the end of 2 years (from the first phone you bought) you'll be in the hole to verizon $324.50 on your second phone, still owing 12 more months of payments. Total out of pocket after the first 24 months is $649 ($27.04 x 24) plus you still owe verizon $324.50 for your 12 month old phone. So at the end of 24 months your total out of pocket cost to walk away with your 12 month old phone is $973.50.

If you went the subsidized route you would have paid $199 up front. Then at 12 months you sell the phone on ebay for $300, then buy a new phone for $649. At the end of 2 years (from the first phone you bought) your contract with verizon has ended and you owe them nothing. Total out of pocket at the end of the 24 months is $548 ($199 minus $300 plus $649) and you owe nothing on your 12 month old phone.


This is slanted so far against the consumer I'm assuming I'm missing something here.

 

[Aquila]

Compared to the on-contract method, it's a no brainer. The cost savings is versus buying devices outright every time, and then it's still based on your ability to recoup during resale. It looks like you did pick up on the cash flows being most optimized at 12 month upgrades, rather than 6 months, but there is no way to negate the savings of generally $200-$550, dependent on device, that you get for signing a contract.

After two years with one upgrade in between the $649.00 +$324.50 still owed is correct, versus the $1298.00 paid with buying two phones outright with the potential of gaining $324.50 back (50%) on a year old phone (net from fees, shipping, etc) you'd expect to break even. So there is a risk: the expected valuation of the resale device, (only advantageous if you expect to earn less than 50% of full retail) but there is also a reward from doing it this way: You could put the entire 649 into savings and make the payments from that savings account, earning interest along the way. Same number of upgrades, keep a few bucks for yourself, offsetting the risk and perhaps turning it to your advantage instead of the market's.

For those that want to remain off contract and/or don't necessarily have $649 to pay upfront (or even $199, etc) this is a good option, but for those than can afford to drop $649 every 6-12 months per line, there's nothing really stellar about this, basically just a slightly better potential yield at the end of multiple cycles.

I'd also assume you'd drop insurance due to the ease of upgrading sooner so presumably $7-10/month savings there, but I suppose it would depend on the requirements for usability upon turn-in.

 

[Clocks]

After two years with one upgrade in between the $649.00 +$324.50 still owed is correct, versus the $1298.00 paid with buying two phones outright with the potential of gaining $324.50 back (50%) on a year old phone (net from fees, shipping, etc) you'd expect to break even

I hope I didn't miss your point, but assuming a person is willing to either do a contract or vz edge (i.e. no moral or credit objection to the contract route) you're not paying $1298 for two phones if you do a 2 year contract, you're paying $848 ($199 plus $649, verizon is subsidizing the rest of the first phone in your monthly fees that you pay either way) and you expect to get something back from selling your first phone privately, whatever that is.

But even if you throw your first phone in the trash at 12 months and buy a new one at full price you've still beaten the VZ edge price ($848 vs $973.50).

 

[Aquila]

Assuming a person is willing to either do a contract or vz edge (i.e. no moral or credit objection to the contract route) you're not paying $1298 for two phones if you do a 2 year contract, you're paying $848 ($199 plus $649, verizon is subsidizing the rest of the first phone in your monthly fees that you pay either way).

Even if you throw your first phone in the trash at 12 months and buy a new one at full price you've still beaten the VZ edge price.

Yes, I agree with that:

Compared to the on-contract method, it's a no brainer. The cost savings is versus buying devices outright every time, and then it's still based on your ability to recoup during resale.

Signing the contract is definitely worth it from a cost standpoint, and the better deal you get on the subsidy, even more so.

 

[Clocks]

That sucks. It would be really nice if this made any financial sense at all. I like new phones. I don't like paying several hundred bucks at once. But this is really a horrible scam.

 

[dpham00]

I thought the exact details of the plan isn't released yet. I wouldn't be surprised if you had to pay a monthly service charge for the "privilege" of using the plan, similar to their device payment plans. Either way, it is most certainly not financially beneficial to the customer compared to contract pricing

Sent from my Verizon Samsung Galaxy Note II

 

[bespinct]

I thought the exact details of the plan isn't released yet. I wouldn't be surprised if you had to pay a monthly service charge for the "privilege" of using the plan, similar to their device payment plans. Either way, it is most certainly not financially beneficial to the customer compared to contract pricing

Sent from my Verizon Samsung Galaxy Note II

The blog post mentioned that there is no service fee for using the service.

Posted via Android Central App

 

[dpham00]

The blog post mentioned that there is no service fee for using the service.

Posted via Android Central App

I guess that's good news, but the rest of the plan sucks

Sent from my Verizon Samsung Galaxy Note II

 

[bespinct]

I guess that's good news, but the rest of the plan sucks

Sent from my Verizon Samsung Galaxy Note II

Yup!

Sent from my HTC6435LVW using Tapatalk 4 Beta

 

[hokiesteve]

Maybe this is the carrier's goal all along, but it seems a lot of blogs are just having trouble figuring out the real cost here. I'm trying to figure out who would be better off at the end of 24 months: someone on VZ edge or someone going the subsidized/contract route?

Assume a new device costs $649

You get it on VZ Edge and you start paying $27.04/m. Then after 12 months you trade it in and get a new phone - your existing debt is wipe out and you start over with 24 new monthly payments at $27.04 per month. At the end of 2 years (from the first phone you bought) you'll be in the hole to verizon $324.50 on your second phone, still owing 12 more months of payments. Total out of pocket after the first 24 months is $649 ($27.04 x 24) plus you still owe verizon $324.50 for your 12 month old phone. So at the end of 24 months your total out of pocket cost to walk away with your 12 month old phone is $973.50.

If you went the subsidized route you would have paid $199 up front. Then at 12 months you sell the phone on ebay for $300, then buy a new phone for $649. At the end of 2 years (from the first phone you bought) your contract with verizon has ended and you owe them nothing. Total out of pocket at the end of the 24 months is $548 ($199 minus $300 plus $649) and you owe nothing on your 12 month old phone.


This is slanted so far against the consumer I'm assuming I'm missing something here.

This is probably the most concise analysis of contact vs edge that I've seen so far. The VZ Edge plan is a huge ripoff. When T-Mobile offered non subsidized plans the dropped the price 20$ compared the subsidized phone plans. I suspect Verizon didn't miss the memo though. I suspect that much like the share your wallet plans, Verizon is going to gradually push people towards that model and use reduced subsidies as a plan for revenue growth over the long run.

Sent from my Galaxy Nexus using AC Forums mobile app

 

[dpham00]

Maybe this is the carrier's goal all along, but it seems a lot of blogs are just having trouble figuring out the real cost here. I'm trying to figure out who would be better off at the end of 24 months: someone on VZ edge or someone going the subsidized/contract route?

Assume a new device costs $649

You get it on VZ Edge and you start paying $27.04/m. Then after 12 months you trade it in and get a new phone - your existing debt is wipe out and you start over with 24 new monthly payments at $27.04 per month. At the end of 2 years (from the first phone you bought) you'll be in the hole to verizon $324.50 on your second phone, still owing 12 more months of payments. Total out of pocket after the first 24 months is $649 ($27.04 x 24) plus you still owe verizon $324.50 for your 12 month old phone. So at the end of 24 months your total out of pocket cost to walk away with your 12 month old phone is $973.50.

If you went the subsidized route you would have paid $199 up front. Then at 12 months you sell the phone on ebay for $300, then buy a new phone for $649. At the end of 2 years (from the first phone you bought) your contract with verizon has ended and you owe them nothing. Total out of pocket at the end of the 24 months is $548 ($199 minus $300 plus $649) and you owe nothing on your 12 month old phone.


This is slanted so far against the consumer I'm assuming I'm missing something here.

To give Verizon some credit (not much), Verizon edge is actually better than att next... But neither are anywhere close to tmo jump.

Sent from my Verizon Samsung Galaxy Note II

 

[Jude526]

I won't be renewing with the edge.prefer contract and subsidized phone pricing.
Too bad Verizon has to make it so expensive for those that want it.

sent from my amazing Note2