Despite the high up-front costs, prepaid cellphones can offer substantial savings over the course of a contract, according to PCWorld.
The costs for a prepaid cellphone can seem daunting for several reasons, with the condensed price of the plan only part of it. Often people will want to get a phone along with the prepaid plan. Since the cellular provider is taking a lower price for the actual service, they are not terribly inclined to subsidize the phone itself, pushing up the immediate costs by several hundred dollars.
FierceWireless notes that AT&T currently sells the iPhone 4 for $200 with a two-year plan, but the phones sells for $649 normally.
Some of the more expensive two-year prepaid plans can run more than $3,000 on top of the price of the phone, such as the HTC ThunderBolt from Verizon with 5 gigabytes of data at $3,610. However, some of the cheapest plans can get down to as little as $1,250 including the phone, such as the Boost Mobile Samsung Transform. Companies such as Virgin Mobile, MetroPCS and Cricket Wireless are all carriers that offer prepaid plan at less than $2,000 for two years of coverage.
With an unlocked phone, these prices can drop even lower, offering savings of as much as $600 with major companies like T-Mobile and AT&T.
New Millenium Research Council notes that as many as three-fifths of new contracts in 2010 were prepaid plans, rather than traditional contracts.