Smartphones are the hottest segment in the consumer technology space. In fact, if you are between the ages of 18-49 and don’t own a smartphone you are in the minority. Of adults between the ages of 18-29, 66 percent own a smart phone. The number is a little lower with the 30-49 group at 56 percent. With Apple’s iPhone 5 already announced and some very hot Android phones going on sale before the holidays, you can be sure that that number will jump the next time Pew Research does a survey. However, smartphones are expensive and so are the requisite data plans that go with them. Just how expensive? Read on to find out.
When people go to buy a smartphone they often concentrate on the initial cost of the device itself and only casually consider the cost of the 2-year contract that is often associated with it. They often also fail to consider the cost of any additional apps that they may purchase.
A good smartphone will cost you anywhere from $50-$400 dollars depending on the model. The best smartphones tend to cluster in the $200-300 price range. Data and voice plans for these smartphones will cost you anywhere from $80-100 on contract depending on your carrier and the specifics of your plan. This means you will pay at least $1,920 over the life of your contract. Add in the cost of the smartphone, let’s say $200, and you are at $2,120. If you purchase a protection plan at $8/month (not worth the money if you ask me. If you are really worried about dropping your phone, consider an Otterbox case instead) you are at $2,312. And that’s just the phone and a 2-year, average data usage contract.
Now for the apps, which are the whole reason you bought your smartphone in the first place. Among people who regularly buy apps, the average is $14/month. However when you include smartphone owners that don’t pay for apps, the average drops to $7.50. We’ll use the lower number. Over the life of a 2-year contract that comes out to be $180. Now you are at $2,490
Now let’s add in accessories like an alarm clock dock ($75), case ($30) car dock ($30), car charger ($15), better headphones ($30+) and an armband ($20) that will hold your phone while you work out. These represent fairly typical prices and are probably on the low-end. You are now at $2,690.
Let’s not forget about music. The average user spends about $50 a year or about 5 albums. So that adds another $100 to the total cost. If you pay for a music streaming service like Spotify, the number is actually $240 over two years.
So by owning a smartphone and not paying attention to your spending you could potentially spend nearly $3,000 over the lifetime of a 2-year contract. These are also conservative estimates. This is only for a single-line smartphone plan. The cost can almost double if you and your significant other both have smartphones.
Don’t get me wrong, I’m not against smartphone ownership. I own one myself and I love it. However, when you do the math you can’t help but take a bit of pause. Ask yourself, is that $3,000 (or more) worth it? What other things could you possibly do with that money? Pay off debt? Build your savings account?
It is possible to save money with a smartphone plan which I will discuss in a later blog post.
Do you own a smartphone? Is it worth it to you?
~Kenny from the Oregon Saves team