Go Prepaid, Buy The Galaxy Nexus Unlocked and Save $600

Most people do not realize that their phones cost them a lot more than they pay for them initially. This is the reason why the cell phone industry has such high margins. Just check out Best Buy’s quarterly report and you will see smartphones are their highest margin product. This is because people don’t sum up their monthly fees and include them in the total cost of owning their phone. Since customers are locked into a two year contract the carriers do not have to compete and the consumer loses. You will notice prepaid rates are much more competitive and do NOT  include taxes and fees. Prepaid plans have to compete so the fee you get per month is the fee that is advertised to you (unlike post paid where they tap on $8-$15 in taxes and fees).

So let’s crunch some numbers to see how these differences play out. A perfect example is with the Galaxy Nexus phone that Google just started selling at $399.99. This is a sweet deal so let’s compare it to the other deal for $49.99 at Amazon.com. That was for Verizon, but let’s pretend it could run on AT&T for  a fair cost comparison.

If you want text and web at AT&T you will need to pay at least $30 for web and $20 for text. So even if you went with the minimum minute plan for 450 minutes at $39.99, you would have a monthly fee of $90 + tax or ~$100/month. Now let’s look at prepaid. The best option for AT&T is actually the H20 network, which uses the same AT&T towers and has the same AT&T service, but costs only $60/month for UNLIMITED voice and text and 2GB of data (Note no taxes or extra fees). So let’s do the math over 2 years

	Post Paid	Pre-Paid
Carrier	AT&T	H20
Minutes	450	unlimited
Text	unlimited	unlimited
Data	3GB	2GB
Cost	$100/month	$60/month
24 month contract cost	$2,400	$1,440
Phone cost	$50	$399
Total Cost	$2,450	$1,839

As you can see you will save $611 by going prepaid and will actually get a lot more minutes to talk (unlimited).  This means you could get a brand new unlocked phone every year and still end up ahead. So why empower the carriers when you can hold the power in your own hands. You do not need to sacrifice phone quality or network quality anymore. If you want a different phone than the Galaxy Nexus, then browse our site for hot deals on unlocked phones and put the power back in your hands! Make the carriers compete for you instead of locking you in for years.

Update: We added used phone prices from craigslist to our pricing engine. Just click the “used” price type before hitting go. You can find a Galaxy Nexus in “like new” condition for $250…