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

All they really care about is locking you into a subscription long term. If they give you a 1000 dollar phone, and you commit to 2 or 3 years at 1200 or more a year… They are golden.