When you pay $0 upfront for a phone over a given period, the sum of the payments is less than the retail price of the phone. How is this possible?

Question

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?

In: 0

Answer 1

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.