I don't get the math here...
Someone correct me if my figuring is wrong.
You did make a few errors, let me run it down for you.
First, I'm going to make an assumption that we are going to be discussing a 10 GB plan, which lowers the off contract per device rate to $15 a month, a total savings of $25 a month over hte on contract price. Now math.
15*24=360+750= $1,110 total cost over 24 months for an off contract Note.
40*24= $960 + $250= $1,210 over 24 months for an on contract Note.
So, as you can see, with a $750 phone like the Note, you are only saving $100 over the course of the contract. You also gain the freedom to leave and take your phone with you whenever you want. However, where off contrcract phones make much, much more sense is with less expensive devices. Lets look at our numbers again, this time using a free crappy Android phone for the on contract plan and a $350 Nexus 5 for the off contract plan
15*24=$360+$350=$710 over two years for an off contract Nexus 5
$40*24=$960 over two years for a crappy "free" phone.
You'd save $250
and have a better phone by being off contract in this scenario/
Now lets say you are still okay with a Nexus 5 (or Moto X since they are close in price) but you'd want a comperable phone when you were on contract, say a Galaxy S5.
$15*24=$360+$350=$710 off contract over 2 years
$40*24= $960 + $200 =$1,160 on contract for a GS5/HTC One/Other flagship.
In this scenario, you get a comperable phone in either plan and you are saving $450 over the two years. This means you could get a new Nexus in the second year (assuming similar pricing) and still save $100 if you felt so inclined.