For example I can purchase an iPhone 14 Pro Max from my carrier for $0 upfront and payments of $41.79CAD over 24 months. The retail price of the phone is $1539. $41.79*24 months = $1002.96. How is it possible that the carrier is essentially selling the phone for significantly less than the retail price? Am I missing something?
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They are willing to give you a discount on the phone to keep you in a a contract for 2 years. You will pay the difference through you phone service in that time. However, be sure you’re actually making payments to own the phone. There may be some wording that makes it seem like you own the phone, when in reality you are renting it or otherwise have to give it back when you upgrade, or pay the $500 difference to keep it.
Retailers aren’t worried about sales as much as margin. Often those deals are only valid if you open a new contract, add a line, etc. Those increase the margin of having you as a customer.
Selling a $1500 phone with a $750 cost nets them $750. Selling a phone for $1000, but with a $50 monthly plan nets them $1450.
You are missing two important things.
1. The retail price is not what the carrier paid for the phone they paid less than the retail price.
2. Your monthly phone includes plenty of profit for them to make up for any perceived loss on the phone’s price.
You don’t mention your contract status but you are probably tied into the carrier with a contact to get the phone. You are correct to be suspicious, if they gave you a phone it would be obvious that they charge you for it as part of your m ok monthly bill. If you want to try and figure out what the real cost to you is.
Compare what the carriers lowest cost prepaid , bring your own device no-contract price is. I am paying 20$ a month US for 10 gigs of data. The retailer charges more than $40 for that plus fees.
At the end of the 24 months, usually they’ll slap you the final fee. Usually happens when you want to upgrade.
Are you talking about this Telus deal?
https://www.telus.com/en/mobility/phones/iphone-14-pro-max
The catch is that you don’t get to keep the phone. You give it back after 2 years.
Back in the day (I’m talking up until ~5-7 years ago) phones used to be free or very cheap (like $200) with a 2-year contract with your phone provider. They got rid of those plans and switched to trade-in + installment payments for the device. So now in addition to the phone bill you also pay for the device and almost always end up trading it back to them when it is time for an upgrade, so the provider is getting 3 lines of revenue from the same customer. Or even more if they upsell you on device protection or whatever else.
So sometimes they will offer a discount on the phone to get customers to switch.
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