Today, Verizon shook up the cell phone industry by eliminating two-year service contracts for new customers. In addition, the nation’s largest wireless company stopped offering discounted prices on new smartphones. Customers will begin paying full price instead of a reduced two-year promotional price.
For example, an iPhone 6 at Verizon was previously $199 with a two-year agreement. A new iPhone 6 will now cost $649. Customers can pay 100% upfront or monthly installments of about $27 for two years.
The new Verizon monthly shareable data plans are $30 for 1GB per month, $45 for 3GB per month, $60 for 6GB per month and $80 for 12GB per month. Each smartphone on the account pays $20 per month. Each tablet costs $10 per month. If you do not pay 100% for your phone up front, you will need to add the monthly installment price to your monthly bill.
One impact this will have on phone purchasing is the actual cost difference between iPhones and Androids. While high end Androids such as the Samsung Galaxy S6 Edge cost $649, new Androids like the 4.5 inch qHD screen Moto G cost a mere $169. While many people will continue to pay a premium for Apple products, more consumers will begin to compare the full price of iPhones to Androids.
Apple makes most of its money on the profit margin of iPhone sales, rumored to be up to 69% for the iPhone 6. Google makes most of their profit margins on the additional search and ad revenue from the more than one billion Android devices in use today.