eli5 phone companies: How do they make money when you upgrade and trade-in your phone?

Question

If I upgrade my phone and it costs $500 (billed spread over 3 years) and I trade-in my old phone and get $500 credit, spread over 3 years, how is the phone company making any money? What am I missing?

In: 3

Answer 1

they want to keep you as a customer, so you’re more likely to give them money in the future. they’re playing the long game. phone trade-in means happy customer which means a continuing customer.