# Cell Phone Prices - Lease vs Buy Outright



## young_gun (Jan 20, 2010)

Hello. My cellphone provider is offering a Pixel 6a for 10$ a month for 2 years + $50 activation fee, and get to keep the phone afterwards (total of $290). Google, Amazon, Best Buy, etc are offering the same phone for $475 to $500 to buy outright. How does the cell provider make money on this deal?

From what I've read, the customer ends up breaking even on most leases vs buying outright, but don't understand how this works. Can someone please explain? Thank you in advance.


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## AltaRed (Jun 8, 2009)

The telecoms are locking you into 2 years with no walking to someone else plus they don't pay retail for the phones. They are likely getting the one you mentioned for $290.

I am in the process of getting a new phone for spouse for Xmas. I will still buy it outright unlocked with the freedom to move to whom she wants when she wants and to swap out sims or use the esim for international travel.


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## cainvest (May 1, 2013)

AltaRed said:


> The telecoms are locking you into 2 years with no walking to someone else plus they don't pay retail for the phones. They are likely getting the one you mentioned for $290.


The above plus they usually limit you to certain higher priced data plans to get the deal. If you plan to use the more expensive plan anyways then it's a wash price wise.

BTW, Costco has the Pixel 6a 128gb for $1.00 a month on select plans.


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## MK7GTI (Mar 4, 2019)

It baffles me why people don't buy their phones outright. Doesn't make any sense NOT to.


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## cainvest (May 1, 2013)

MK7GTI said:


> It baffles me why people don't buy their phones outright. Doesn't make any sense NOT to.


Not sure if buying is better deal for some higher end phones and if the carrier has the plan you want.


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## MrMatt (Dec 21, 2011)

MK7GTI said:


> It baffles me why people don't buy their phones outright. Doesn't make any sense NOT to.


How so?
If it costs more to buy outright that doesn't seem to make sense.

For me the monthly fee of a BYOP plus 1/24 the phone cost was more than just taking their plan, with a phone.

For example, today, you can buy a Pixel 7 For $9.50/month over 24 months (so about $240) or buy it outright for $936 through Fido ( or from $649 from Google)

Seems silly to pay $400 more to buy the phone outright.


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## peterk (May 16, 2010)

young_gun said:


> Hello. My cellphone provider is offering a Pixel 6a for 10$ a month for 2 years + $50 activation fee, and get to keep the phone afterwards (total of $290). Google, Amazon, Best Buy, etc are offering the same phone for $475 to $500 to buy outright. How does the cell provider make money on this deal?
> 
> From what I've read, the customer ends up breaking even on most leases vs buying outright, but don't understand how this works. Can someone please explain? Thank you in advance.


I just went for the same deal - Pixel 6a for $240 + a small fee. Yes it's the best deal you can get vs. buying outright. The ability to change provider seems rather over-rated these days. They're all the same and if you become extremely disgruntled for some reason, you can always leave after your 2 years is up, or suck it up and pay whatever penalty. Seems silly to pay hundreds more up front just to head off this unlikely scenario.

@AltaRed I believe all Canadian sold phones are unlocked these days. You can always pop out your phone plan provider's sim (and keep paying for the month) and pop in a international sim as necessary for during your travels.


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## cainvest (May 1, 2013)

MrMatt said:


> For example, today, you can buy a Pixel 7 For $9.50/month over 24 months (so about $240) or buy it outright for $936 through Fido ( or from $649 from Google)


Works out ok if you like the $55/mo data plan.


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## cainvest (May 1, 2013)

peterk said:


> I believe all Canadian sold phones are unlocked these days.


Yes, thank the CRTC for forcing them to drop that stupid locked phone scam a few years back.


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## MrMatt (Dec 21, 2011)

cainvest said:


> Works out ok if you like the $55/mo data plan.


I actually like the $50/month plan. I have it now.

But I'm just pointing out that the specific phone I would buy (if I needed a phone today) is cheaper to buy on a plan, rather than outright.
I've found quite often that more industries are trying to incentivize "plans", and they're a great deal for the vendors, and an okay deal for customers.

If you're into gaming, things like the Xbox game pass are wonderful deals.
Software subscriptions are also very popular, they want to get everyone on a "monthly payment"

I am looking for a super low cost plan for my kids, they don't need much data.


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## Covariance (Oct 20, 2020)

With an hour or less of extra time it is quite easy to get a discount of 30+% off their posted prices. To do so however one needs to be in a position to walk and they will come to the table seriously


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## young_gun (Jan 20, 2010)

cainvest said:


> BTW, Costco has the Pixel 6a 128gb for $1.00 a month on select plans.


The Pixel 6a offer is 0$ a month, but to keep my same plan, the new plan is $10 a month more on a 2 year term.


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## andrewf (Mar 1, 2010)

young_gun said:


> Hello. My cellphone provider is offering a Pixel 6a for 10$ a month for 2 years + $50 activation fee, and get to keep the phone afterwards (total of $290). Google, Amazon, Best Buy, etc are offering the same phone for $475 to $500 to buy outright. How does the cell provider make money on this deal?
> 
> From what I've read, the customer ends up breaking even on most leases vs buying outright, but don't understand how this works. Can someone please explain? Thank you in advance.


Koodo is offering this phone, at the Mobile Shop (Superstore, etc.) for $0 upfront, $0 per month, $100 worth of point backs on a 'tab medium' plan, which means you must get at least a $55/month plan. That plan currently includes 20gb of data and unlimited talk/text.


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## Ponderling (Mar 1, 2013)

Now lets convince folks they should be buying their water heater when they are home owners.


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## m3s (Apr 3, 2010)

Ponderling said:


> Now lets convince folks they should be buying their water heater when they are home owners.


I tried but my thread got banned

In the US I had a $15/month data plan better than my Canadian one that costs 3x with less data/speed/coveraage

Also my water tank worked better and didn't have to be rented (could handle shower + dish or clothes washer)

There's something in the Ontario water


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## sags (May 15, 2010)

Amazon Prime is a good deal. Amazon Music is a good deal. Netflix is a good deal. Xbox game pass is a good deal. Sirius XM is a good deal.

I got so many "good deals" on the go, I am going broke......


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## sags (May 15, 2010)

If I sweep all the subscription fees into an "entertainment" folder, will it may me feel frugal if I am within the recommended entertainment spending guidelines ?


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## ian (Jun 18, 2016)

It was far better financially for us to buy our phones outright. We wanted to be free to cherry pick good limited time cell offers when competition heated up.

I am still using my five year old moto that I bought on Amazon for $140 cad.

Absolutely no interest in being tied to a carrier contract


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## m3s (Apr 3, 2010)

sags said:


> If I sweep all the subscription fees into an "entertainment" folder, will it may me feel frugal if I am within the recommended entertainment spending guidelines ?


What about the $300/year tire storage subscription and the $500/year hot water tank rental? Some purchases would break even in less than 2 years

Then realize youtube has lots of free entertainment streaming video and music videos. Now about that platinum protection package subscription


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## MK7GTI (Mar 4, 2019)

deleted.


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## MK7GTI (Mar 4, 2019)

MrMatt said:


> How so?
> If it costs more to buy outright that doesn't seem to make sense.
> 
> For me the monthly fee of a BYOP plus 1/24 the phone cost was more than just taking their plan, with a phone.
> ...


Doesn't seem silly to me at all. I want to own my things. Why do people hold hands with major corps when they can just buy their stuff outright? For me, it's based on principal.


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## andrewf (Mar 1, 2010)

m3s said:


> I tried but my thread got banned
> 
> In the US I had a $15/month data plan better than my Canadian one that costs 3x with less data/speed/coveraage
> 
> ...


You must have a very small HWT if you run out of hot water. I've never experienced that, even when I was one of a family of 6.


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## andrewf (Mar 1, 2010)

MK7GTI said:


> Doesn't seem silly to me at all. I want to own my things. Why do people hold hands with major corps when they can just buy their stuff outright? For me, it's based on principal.


Often big corps structure it to be unappealing/more expensive to not be locked in. BYOD phone plans are not much cheaper, and carriers can get devices for much deeper discounts than are typically offered at retail.


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## AltaRed (Jun 8, 2009)

The prime driver is the carriers can get the devices for that much cheaper. 

That said, I am of the same opinion as post #21 in that I want to own the device outright from day 1.


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## andrewf (Mar 1, 2010)

AltaRed said:


> The prime driver is the carriers can get the devices for that much cheaper.
> 
> That said, I am of the same opinion as post #21 in that I want to own the device outright from day 1.


How much of a premium are you willing to pay to own it outright?


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## AltaRed (Jun 8, 2009)

I really have no idea. I look for the 25% (or more) discounts on new phones outright. I am serious in that I don't care to check what the 24 month math is for a particular phone from a particular carrier. I am speculating it could be 10-15% or so additional savings perhaps.


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## m3s (Apr 3, 2010)

andrewf said:


> Often big corps structure it to be unappealing/more expensive to not be locked in. BYOD phone plans are not much cheaper, and carriers can get devices for much deeper discounts than are typically offered at retail.


In Canada anyways

In the US I had far better plans for $15 and in Europe and Asia it's even cheaper

Canadians are suckers


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## andrewf (Mar 1, 2010)

m3s said:


> In Canada anyways
> 
> In the US I had far better plans for $15 and in Europe and Asia it's even cheaper
> 
> Canadians are suckers


What choices do we have? There is a telco oligopoly of two-ish networks. Rogers and Bell/Telus. Shaw is likely to get absorbed by Rogers. I did try to support Wind when they were independent, until I worked somewhere that they did not provide service to (within the GTA!). If Videotron expands to Ontario I will support them as well. Hopefully they get the Shaw spectrum.


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## MrMatt (Dec 21, 2011)

MK7GTI said:


> Doesn't seem silly to me at all. I want to own my things. Why do people hold hands with major corps when they can just buy their stuff outright? For me, it's based on principal.


Well if the loan saves me $400 over 2 years. I'll take it.



AltaRed said:


> I really have no idea. I look for the 25% (or more) discounts on new phones outright. I am serious in that I don't care to check what the 24 month math is for a particular phone from a particular carrier. I am speculating it could be 10-15% or so additional savings perhaps.


In my example $400 savings, not including cash cards that Costco might give, the actual savings might be $600-700


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## james4beach (Nov 15, 2012)

MK7GTI said:


> It baffles me why people don't buy their phones outright. Doesn't make any sense NOT to.


I agree. Much better to buy your own, unlocked phone, and have total freedom.

On those 2 year contracts there are also terrible fees if you cancel early. I'm guessing there might also be penalties if your phone gets lost or damaged?

In any case the most important thing is to fight consumerism, and don't try to always have the "latest and greatest".



ian said:


> I am still using my five year old moto that I bought on Amazon for $140 cad.


Same here, more or less. I'm using a $180 Moto phone that I've had for many years and am very happy with it. It's probably cost me something like $4/month over all this time. I've also moved it between American and Canadian carriers, and it's great not being locked into anything.

Did you buy yours through Amazon Canada, or US Amazon with shipping to Canada?


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## ian (Jun 18, 2016)

james4beach said:


> I agree. Much better to buy your own, unlocked phone, and have total freedom.
> 
> On those 2 year contracts there are also terrible fees if you cancel early. I'm guessing there might also be penalties if your phone gets lost or damaged?
> 
> ...


Amazon Canada. But no Canadian warranty. It was a new unlocked phone that came from Verizon.

A Koodo booth rep installed a card, etc. up and running in five minutes flat.

DW purchased her Samsung through Koodo. Price was excellent. No service contract. She had to pay $10. Month for 2 years. Would rather have just paid outright four years ago.


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## MrMatt (Dec 21, 2011)

james4beach said:


> I agree. Much better to buy your own, unlocked phone, and have total freedom.


Why is it better to pay hundreds more for the same phone?
All phones sold in Canada are unlocked by law.



> On those 2 year contracts there are also terrible fees if you cancel early. I'm guessing there might also be penalties if your phone gets lost or damaged?


Not in Canada.
a. _for fixed-term contracts: The early cancellation fee must not exceed the lesser of $50 or 10 percent of the minimum monthly charge for the remaining months of the contract, up to a maximum of 24 months. The early cancellation fee must be reduced to $0 by the end of the period._

$50 isn't a terrible fee either.


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## ian (Jun 18, 2016)

I have no idea what the contracts are these days. We went with no contract Koodo service ten years ago. Service has always been good.


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## TomB16 (Jun 8, 2014)

I switched Virgin to Koodoo about 6 months ago. I'm quite pleased with their service and their pricing is decent.

My phone is a Moto G7 Power that was purchased at the end of 2019 at an amazing price. The phone is just Ok but it has some features thatvare important to me (headphone jack and SD card). Software updates ran out at the start of 2021 so I got about a year. From there, I side loaded LineageOS and it has been mostly Ok.
.
I don't recommend Lineage, nor do I discourage it. I think just about everyone should have a phone with software support. It was kind of fun to unlock the phone and set it up to run a side loaded OS but I have a hunch few people would have the patience or interest. Lol.


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## TomB16 (Jun 8, 2014)

My wife gets a free phone every four years and it only costs her $85 per month. Lord help me. Lol


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## MrMatt (Dec 21, 2011)

TomB16 said:


> My wife gets a free phone every four years and it only costs her $85 per month. Lord help me. Lol


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## ian (Jun 18, 2016)

I would think that what phone one selects depends on how it is used.

We only use cell services and very occasionally wifi. No data.

Just a basic phone for us. We prefer to use our iPads for data, etc.


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## Eclectic21 (Jun 25, 2021)

andrewf said:


> You must have a very small HWT if you run out of hot water. I've never experienced that, even when I was one of a family of 6.


I find it strange as well.

Whether the HWH was part of buying the house or a rental that was later replaced, the smallest I can recall is a forty gallon one.

A co-worker of my brother-in-law bought a tankless one that had enough capacity but he ended up replacing it as his wife didn't like the longer delay for hot water to be at the shower head.


Cheers


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## MrMatt (Dec 21, 2011)

m3s said:


> Then realize youtube has lots of free entertainment streaming video and music videos. Now about that platinum protection package subscription


Youtube is ad supported, and there are a LOT of ads.
Pay the $10/month and get an ad free service.


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## Covariance (Oct 20, 2020)

RE DWH - Could be the tank storage temperate was not set-up correctly. I had to look into this myself once. If the storage temp is set too low then the tank capacity will deplete quickly. When bathing, washing etc people are mixing hot and cold to get to a reasonable temp at the tap. If the tank temp is low they may be just drawing from the tank which depletes the storage capacity quickly. 

There is also the possibility of a miss configured anti-scaled mixing valve at the tank.


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## MrsPartridge (May 15, 2016)

I got a new phone from The Mobile Shop at the Superstore. The phone is about $1000 new but I got a deal by going with the plan. I pay $10 a month (so $360 total) and they gave me about $250 PC points. So pretty good deal since I want to stay with my provider anyway.
For Black Friday they're giving 300,000 PC points which is $300. 
It's worth checking out what deals they can offer you if you need a new phone.


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## m3s (Apr 3, 2010)

MrMatt said:


> Youtube is ad supported, and there are a LOT of ads.
> Pay the $10/month and get an ad free service.


Some ads are built into the videos which I just skip

I see so few ads nowadays on Brave browser using a good VPN that I don't mind

Going back to normal something is pretty eye opening


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## Jericho (Dec 23, 2011)

MrMatt said:


> I actually like the $50/month plan. I have it now.
> 
> But I'm just pointing out that the specific phone I would buy (if I needed a phone today) is cheaper to buy on a plan, rather than outright.
> I've found quite often that more industries are trying to incentivize "plans", and they're a great deal for the vendors, and an okay deal for customers.
> ...


I got my 45$ a month / 25gb / unlimited nation wide calling/texting with Rogers, by owning my phone. I was unhappy with the service I was receiving and I cancelled my service with Rogers and went with Shaw. 2 weeks later, Rogers retention called me and offered me the deal, which I gladly have accepted. Obviously, this deal would not have been available to me had I been under contract with Rogers.


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## andrewf (Mar 1, 2010)

MrMatt said:


> Why is it better to pay hundreds more for the same phone?
> All phones sold in Canada are unlocked by law.
> 
> 
> ...


They have basically recreated the old lock-in scheme with device purchases. Most/all carriers give you an upfront device credit that gets amortized linearly over a 24 month contract when you get a new phone. If you cancel, you are liable for the remaining device credit as a form of penalty. The device credit is usually the difference between the retail/MSRP of the phone and what they sell it for, so it can start upwards of $1k.

However, I don't think carriers can or do raise rates on users, so I am kind of okay with this 2 year semi-lock in.


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## andrewf (Mar 1, 2010)

MrsPartridge said:


> I got a new phone from The Mobile Shop at the Superstore. The phone is about $1000 new but I got a deal by going with the plan. I pay $10 a month (so $360 total) and they gave me about $250 PC points. So pretty good deal since I want to stay with my provider anyway.
> For Black Friday they're giving 300,000 PC points which is $300.
> It's worth checking out what deals they can offer you if you need a new phone.


Should only be 24 month or $240. They can't set contract lengths longer than 24 months.


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## cainvest (May 1, 2013)

Stopped in to see the deals on phones and saw the new Samsung Z Fold 4 ... only $2400 outright buy.


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## andrewf (Mar 1, 2010)

Covariance said:


> RE DWH - Could be the tank storage temperate was not set-up correctly. I had to look into this myself once. If the storage temp is set too low then the tank capacity will deplete quickly. When bathing, washing etc people are mixing hot and cold to get to a reasonable temp at the tap. If the tank temp is low they may be just drawing from the tank which depletes the storage capacity quickly.
> 
> There is also the possibility of a miss configured anti-scaled mixing valve at the tank.


Is there not also a risk of legionella bacteria if a HWT is set too low (about 50C)?


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## HappilyRetired (Nov 14, 2021)

andrewf said:


> They have basically recreated the old lock-in scheme with device purchases. Most/all carriers give you an upfront device credit that gets amortized linearly over a 24 month contract when you get a new phone. If you cancel, you are liable for the remaining device credit as a form of penalty. The device credit is usually the difference between the retail/MSRP of the phone and what they sell it for, so it can start upwards of $1k.
> 
> However, I don't think carriers can or do raise rates on users, so I am kind of okay with this 2 year semi-lock in.


It's not a penalty, they're simply spreading the cost of the device over a 24-month time frame. If you leave the plan you're still expected to pay for the phone at the price that you originally agreed on.

Read the contract and do some basic math. I've paid $240 for a Samsung phone ($10 a month for 24 months) that retailed for $400. The basic plan that came with that phone suited all my needs.


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## andrewf (Mar 1, 2010)

HappilyRetired said:


> It's not a penalty, they're simply spreading the cost of the device over a 24-month time frame. If you leave the plan you're still expected to pay for the phone at the price that you originally agreed on.
> 
> Read the contract and do some basic math. I've paid $240 for a Samsung phone ($10 a month for 24 months) that retailed for $400. The basic plan that came with that phone suited all my needs.


Trust me, I can do both simple and complex math.

Regardless of what they call it, they are creating a lump sum negative cash flow for switching providers before the end of the 24 month term. Practically, it's a penalty. A negative incentive for taking an action.

I mean, I described how the penalty works in the post you quoted, as it is stated in the carrier contracts. I'm not sure why you're telling me to read the contracts--I have! Rogers also has a more insidious arrangement where after 2 years you have to give the phone back if you get a new device. I considered going to Rogers but decided against it due to that language in their contract.


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## MrsPartridge (May 15, 2016)

andrewf said:


> Should only be 24 month or $240. They can't set contract lengths longer than 24 months.


Oh yes, $240 for the phone and $240 in PC points. So free if I'm willing to stay with the provider. Can't complain.


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## HappilyRetired (Nov 14, 2021)

andrewf said:


> Trust me, I can do both simple and complex math.
> 
> Regardless of what they call it, they are creating a lump sum negative cash flow for switching providers before the end of the 24 month term. Practically, it's a penalty. A negative incentive for taking an action.


Maybe you can't do math because it's not a penalty, you're just paying the remainder owing for the phone.



> I mean, I described how the penalty works in the post you quoted, as it is stated in the carrier contracts. I'm not sure why you're telling me to read the contracts--I have! Rogers also has a more insidious arrangement where after 2 years you have to give the phone back if you get a new device. I considered going to Rogers but decided against it due to that language in their contract.


That's entirely different.


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## andrewf (Mar 1, 2010)

HappilyRetired said:


> Maybe you can't do math because it's not a penalty, you're just paying the remainder owing for the phone.


Perhaps you can't do math. Shall I provide you an example?

Here is a current offer for Koodo. Galaxy S22, tab mid is $240 upfront + $15/month * 24 months = $600. That offers comes with $760 of what they cryptically describe as "Tab Bonus". What does the fine print say:






Samsung Galaxy S22 | Koodo Mobile







www.koodomobile.com





"_If you cancel your service or if Koodo terminates the Agreement in accordance with the Service Terms, any Tab balance *plus the Tab Bonus balance becomes due and payable*. All other charges owing to Koodo for use of the service will remain due upon the termination of this Agreement. The remaining Tab balance and Tab Bonus balance will be calculated based on an equal monthly reduction over a 24-month period."_

What does their FAQ say about the "Tan Bonus"?

*What is the Tab Bonus?*
_Similar to the Tab, the Tab Bonus helps to reduce the cost of your phone, making it easy for you to get the phone you really want. The difference between the Tab and the Tab Bonus is that you pay a Tab charge to reduce your Tab balance every month, but your Tab Bonus is all for you - on us. Learn more about the Tab Bonus._

Hence, that $760, decreasing by 1/24th per month, is an effective penalty you would have to pay, over and above the amortized cost of the device you pay monthly, if you cancel your service within 24 months. You do not pay any of this $760 if you do not cancel your service within the 24 month term--it is not included in your monthly bill.

I do not know what you could possibly call this, other than a penalty. Next you'll tell me that the mortgage break fee is not a penalty, it is just repaying the bank the remainder of the investment they made in giving you the loan.

I view this "Tab Bonus" as what they might call a device subsidy. It is probably close to the margin the carrier would make selling the device retail, and the $600 the customer actually pays is closer to the wholesale price the carrier pays to the device manufacturer. The carriers are happy to forego the retail markup on devices in exchange for term lock-in of customers.


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## cainvest (May 1, 2013)

andrewf said:


> Here is a current offer for Koodo. Galaxy S22, tab mid is $240 upfront + $15/month * 24 months = $600.


So which is cheaper over 24 months ....

use your example above
buy the phone outright

This of course assumes the person wants the same plan for phone & data.


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## andrewf (Mar 1, 2010)

You would have to buy that phone, retail, for less than $600 for it to be better to buy outright than through contract. Carriers don't give much of a discount from BYOD.

Samsung has it for $860. So the $600 + $760 "penalty' option from Koodo only becomes cheaper if you hold for more than 15 months. In other words, if you cancel your service with 15 months of a 24 month term, you are paying a true "penalty" over buying outright.









Buy Galaxy S22 | S22+ | Price & Deals | Samsung Canada


Buy the new Samsung Galaxy S22, S22 Plus mobile phone. Get your new Galaxy smartphone with Trade-in, save up to $561 at Samsung Canada.




www.samsung.com












Samsung Galaxy S22 5G Black 128GB - 6.1" 120 Hz AMOLED Display, 50MP+12MP+10MP Rear Camera, 10MP Selfie Camera, 8K Video, Night Mode (CAD Version & Warranty) : Amazon.ca


Samsung Galaxy S22 5G Black 128GB - 6.1" 120 Hz AMOLED Display, 50MP+12MP+10MP Rear Camera, 10MP Selfie Camera, 8K Video, Night Mode (CAD Version & Warranty) : Amazon.ca



www.amazon.ca


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## cainvest (May 1, 2013)

andrewf said:


> You would have to buy that phone, retail, for less than $600 for it to be better to buy outright than through contract. Carriers don't give much of a discount from BYOD.


So you save at least $260 (860-600) by going the contract route. 

Even better at Costco w/ Virgin? 

Galaxy S22, $0 upfront + $25.83/month * 24 months = $619 - ($300 Costco cards) = $319
You also get,

Bonus Wireless Earbuds
Bonus car charger
So you save at least $541 by going the contract route.



andrewf said:


> Samsung has it for $860. So the $600 + $760 "penalty' option from Koodo only becomes cheaper if you hold for more than 15 months. In other words, if you cancel your service with 15 months of a 24 month term, you are paying a true "penalty" over buying outright.


BTW, does anyone really cancel their cell contracts?


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## HappilyRetired (Nov 14, 2021)

andrewf said:


> Perhaps you can't do math. Shall I provide you an example?
> 
> Here is a current offer for Koodo. Galaxy S22, tab mid is $240 upfront + $15/month * 24 months = $600. That offers comes with $760 of what they cryptically describe as "Tab Bonus". What does the fine print say:
> 
> ...


I've never heard of tab bonus, perhaps you should have clarified the difference between that and most other plans that simply ask you to pay the remaining owing for the phone if you cancelled. Being vague and saying "gotcha" is annoying.


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## ian (Jun 18, 2016)

HappilyRetired said:


> I've never heard of tab bonus, perhaps you should have clarified the difference between that and most other plans that simply ask you to pay the remaining owing for the phone if you cancelled. Being vague and saying "gotcha" is annoying.


I always thought that the Koodo offer was very straightforward.

In my spouses case the phone cost $240. The only way to buy it was to pay $10. Per month for 24 months. A PITA..we would have preferred to pay it all at once. But..the price was attractive.

And yes…had we cancelled the service within 24 months we would have had to pay the remaining balance. Perfectly reasonable. There was certainly no gotcha, no hidden costs.


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## HappilyRetired (Nov 14, 2021)

ian said:


> I always thought that the Koodo offer was very straightforward.
> 
> In my spouses case the phone cost $240. The only way to buy it was to pay $10. Per month for 24 months. A PITA..we would have preferred to pay it all at once. But..the price was attractive.
> 
> And yes…had we cancelled the service within 24 months we would have had to pay the remaining balance. Perfectly reasonable. There was certainly no gotcha, no hidden costs.


I agree and that's how it's always worked for me. However, the Tab Bonus referred to in post #53 is in addition to the phone cost which wasn't made clear at first:

"The Tab Bonus amount is included in your Customer Service Agreement (CSA) and the balance draws down equally over 24 months, so each month the Bonus balance will decrease similar to the Tab.

*Do I pay towards the Tab Bonus, similar to the Tab?*
No, you do not make monthly payments to reduce your Tab Bonus balance, because it automatically reduces every month. You’ll just have to pay back the remaining Tab Bonus balance if you cancel, upgrade, or change to an ineligible rate plan before the balance reaches $0.

*Just so I understand, I do not have to pay back any of the Tab Bonus amount if I do not cancel, upgrade, or change to an ineligible rate plan before 24 months?*
You’ve got it!"

The Tab Bonus (formerly ‘Phone Credit’) | Help | Koodo Mobile


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## Eclectic21 (Jun 25, 2021)

HappilyRetired said:


> I've never heard of tab bonus, perhaps you should have clarified the difference ...


Hmmm ... Koodo is owned by Telus and has the tab bonus
.
Freedom mobile is owned by Shaw where they "myTab" is the amount by which the upfront cost of a Device will be reduced, with such amount being reduced by equal amounts each month until your commitment end date. Near as I can tell, the early cancellation fee is listed as being a minimum, the remaining myTab balance and could be more.


Cheers


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## ian (Jun 18, 2016)

My spouse and I are on the same Koodo plans. Unlimited Canada.

But..we pay different amounts. She is $35. I am $23 for the same. I was on $15 pay as you go…then at one point Koodo offered me $23 for the same program as my spouse. No idea why.

She can buy a phone through Koodo but I cannot. No idea why but it is a non issue for me.


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## andrewf (Mar 1, 2010)

HappilyRetired said:


> I've never heard of tab bonus, perhaps you should have clarified the difference between that and most other plans that simply ask you to pay the remaining owing for the phone if you cancelled. Being vague and saying "gotcha" is annoying.


Provide an example. All the carriers do this. Perhaps you had not noticed.


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## ian (Jun 18, 2016)

Why not simply log in to the Koodo site and see for yourself ???

If you hit she shop key your questions about tab plus will be glaringly obvious. In about one minute or less.

It really is not that complicated nor is it much of a mystery.


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## andrewf (Mar 1, 2010)

`


ian said:


> Why not simply log in to the Koodo site and see for yourself ???
> 
> If you hit she shop key your questions about tab plus will be glaringly obvious. In about one minute or less.
> 
> It really is not that complicated nor is it much of a mystery.


Is this addressed to me? I am challenging mr retired to provide an example of a Canadian carrier that doesn't have some sort of contract break penalty when you cancel a plan that provides a subsidized device.


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## ian (Jun 18, 2016)

andrewf said:


> `
> 
> Is this addressed to me? I am challenging mr retired to provide an example of a Canadian carrier that doesn't have some sort of contract break penalty when you cancel a plan that provides a subsidized device.


No. Really addressed to anyone....especially those that harp on and on, question, and argue without actually bothering to access a vendor or agency webside, whatever it happens to be, to resolve a question within minutes or seconds. Or seem too distracted to pick up a phone and call the vendor or the agency.

My spouses Koodo plan has no contract. Neither doe my service agreement. Strictly month to month. She can change it or cancel at any time with no penalty. That, plus attractive rates and good cell service is what attracted us to Koodo ten years ago. Her original contract was $40. Saw an add offering the same for $35. She went on the Koodo website and changed to that plan. No issue whatsoever. I moved from flat monthly fee. to pay for use. No penalty. Two years later I moved back to a flat monthly plan when offered a great monthly rate.

When she decided to purchase a phone though Koodo the price was $240. She had to pay $10 a month until the $240. purchase price was paid. If she punted Koodo after one year she would be billed for $120...the amount of money owing on her phone. There would be NO penalty as such. Her 'tab' was $240, decreasing by her monthy payment of $10.

It is all laid on on their web site. No mystery, no hidden gotchas. When I went from pay per use on Koodo to a monthly contract the Koodo rep told me to have my spouse register me a referral. She got a $50 account credit once I moved over from pay for use to contract.

We cannot imagine being tied in to some multi year cell phone service contract. It does not make sense for us based on our needs and preferences. The cell phone companies used to lock unsuspecting customers into overpriced contracts on that gag, with locked cell phones, and to people who actually believed that their cell phone was 'free'.


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## MrMatt (Dec 21, 2011)

andrewf said:


> Is this addressed to me? I am challenging mr retired to provide an example of a Canadian carrier that doesn't have some sort of contract break penalty when you cancel a plan that provides a subsidized device.


If they finance the device, you have to pay it off, but the device must be equally amortized over the contract period.
On my Fido contract they specified the actual price of the phone, and that retail price was less than the no contract price for the same device.


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## fstamand (Mar 24, 2015)

I always buy mine. Fido has been good to me.


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## andrewf (Mar 1, 2010)

MrMatt said:


> If they finance the device, you have to pay it off, but the device must be equally amortized over the contract period.
> On my Fido contract they specified the actual price of the phone, and that retail price was less than the no contract price for the same device.


There is no device subsidy that is reduced each month (but not by a payment made my the consumer)?

Using our handy Galaxy S21 FE at Fido:









Cell Phones & Mobile Devices - Shop iPhone, Samsung, Pixel | Fido


Apple or Google? Chrome or Android? Whatever you're looking for, we've got the smartphones and offers you want. Plus, shop with us online and save!




www.fido.ca





$0 upfront, $9.58/month, $39.30 "payment program promotion credit". That combined cost for the device, $48.88 x 24 months = $1173.12 cost, as they note as "Full price". If you cancelled before the end of the term, you are liable for the remaining months of $39.30 promotion credit, which starts at $943.20 in addition the the remaining months of $9.58. If you do not cancel before the end of the 24 months, you pay nothing of the $943.20 'promotion credit', so this is an effective cancellation penalty that decreases linearly over the term. It basically works identically to Koodo.

As noted, on Amazon, the retail price of the device unlocked is $860. Fido/Koodo are adding $300 markup over retail, but you only face that if you change your service to another provider early.

ETA: actually this device is now $640 on Amazon, so Fido/Koodo are marking up $520.


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## ian (Jun 18, 2016)

Our preference is always to pay up front, own our phone w/no payments or strings. We have shopped Koodo phones in the past. Generally we have shopped better prices elsewhere.

Only once over a number of shops has a Koodo phone price been more advantageous than a buy from an on line outlet. 

I am shopping now. No hurry, but no luck. No rush. Waiting for the right phone at the right price unless of course mine suddenly konks out. Prices are so fluid. One thing for certain, I will buy 1 model back and will short list according to reviews on sites like PCmag.


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## Plugging Along (Jan 3, 2011)

We have been 'leasing' the phone for the last 3 cycles with our kids. In the past, with certain larger data plans usually $45+ you could get an iphone for $10 more for 24 months. When our oldest was ready for a phone (4 years ago), we had a friends and family bonus, so got an iphone 7 at the time for $240 over 2 years. The phone was about $700 at that time. 2 years later, when the youngest was ready for a phone, they had the same deal so. However, we didn't our youngest needed that much data. Renewed the first plan for another 24 months, got an iphone 11 for $240 (reg $800) for my youngest, and we added another line for 2gb for $15). Instead of a phone for my second kid, we could have gotten a new phone and sold the old one after two years for about $250 at the time. 

This time around (this weekend), they changed the plans, and my oldest needed a replacement phone. The big data plans have gotten bigger for the same price. It was $45 for the lowest eligible plan, $15 a month for the phone, and the new part was the buyout which was $271 at the end of two years. The regular price of the iphone 13 was about $1000, so it will end up costing $730, so only a savings of $280, but still cheaper than buying outright. 

This last time, we had the option to break the $271 in 24 payments and not owe anything. Instead, we decided to keep them money and will buy it out then.

If one uses one of these larger phone plans, and would get one anyway, I see it being much cheaper to lease the phone. Yes, one loses flexibility, but we have kept our numbers since we have phones, and have no problems meeting the two-year commitment.


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## Faramir (11 mo ago)

AltaRed said:


> The telecoms are locking you into 2 years with no walking to someone else plus they don't pay retail for the phones. They are likely getting the one you mentioned for $290.
> 
> I am in the process of getting a new phone for spouse for Xmas. I will still buy it outright unlocked with the freedom to move to whom she wants when she wants and to swap out sims or use the esim for international travel.


OK that explains a lot. I didn't realize the cell company doesn't pay retail. And then they pass that benefit to you.


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## Faramir (11 mo ago)

sags said:


> Amazon Prime is a good deal. Amazon Music is a good deal. Netflix is a good deal. Xbox game pass is a good deal. Sirius XM is a good deal.
> 
> I got so many "good deals" on the go, I am going broke......


Considering the massive content Netflix and Prime and Disney are great deals. There are so many shows I would die before I watched half of them. We have amazon music. Don't like paying $15 but I and all my kids use it. I hate Xbox for the crappy Microsoft platform that it is. Sirius I just couldn't justify $15 a month for the limited driving that I do. Seems expensive considering Amazon is the same price.


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## ian (Jun 18, 2016)

The margin is in the service, not the phone.


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## MrMatt (Dec 21, 2011)

Faramir said:


> OK that explains a lot. I didn't realize the cell company doesn't pay retail. And then they pass that benefit to you.


Of course not, they're the primary sellers of the products.

I'd say there is at least a good 300-500 on the higher end phones.


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## ian (Jun 18, 2016)

IF the margins on cell phones are anything like the margins for base personal computing hardware then the retailer will be lucky to net 20 point margins for higher end products Often less for entry level product. Much less.


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## MrMatt (Dec 21, 2011)

ian said:


> IF the margins on cell phones are anything like the margins for base personal computing hardware then the retailer will be lucky to net 20 point margins for higher end products Often less for entry level product. Much less.


Luxury products tend to have much higher margins.
I think high end cell phones are luxury products with the requisite price fixing.


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## ian (Jun 18, 2016)

MrMatt said:


> Luxury products tend to have much higher margins.
> I think high end cell phones are luxury products with the requisite price fixing.


The price fixing will be at the manufacture stage, not the retail side. This is an extremely competitive market place. Customers, like me, buy phones on the web or from the carrier. New release higher end products do command more retail margin in my experience BUT only for a very short time. At least this was my experience in the IT marketplace. At one point in time large retailers made more margin on the printer cable that they sold with the printer than they did on the low end printer that they sold. This was why retailers insisted at that time that manufacturers not include a cable with the printer. Same practice for various other products.

Retail competition, and retail margins, for consumer electronics are brutal thanks to the web.

Just think about the business model of the cell phone carriers. What is the cost to acquire an incremental customer or move an existing customer to a higher plan? Then compare that to the revenue stream and associated cost over time. We have both been Koodo customers for 10 years. For my spouse, who has a bottom end plan, that works out to about $3800. At what incremental cost to Koodo other that the cost of an electronic bill every month. Helps cover their fixed costs.

The margin percentage and the margin dollars on a multi year service contract far exceed the margin percentage and margin dollars on a PC sold at Best Buy.


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## MrMatt (Dec 21, 2011)

ian said:


> The price fixing will be at the manufacture stage, not the retail side.


Uhh... yeah.. no.

Go price out Sony 1000XM4 headphones, or Corsair Void Elite Wireless (or any other consistent model)
They're the same price at EVERY retailer, and the sale prices are also coordinated. I know because I've been watching both products.

Phones are nearly identical.
Iphone 13
Fido $1027.08,
Bell $1027.08
The Source $1027.08
Apple $999
Bestbuy $999



> This is an extremely competitive market place.


Doesn't look competitive to me.
Seems like they have 2 tiers with identical pricing.



> Retail competition, and retail margins, for consumer electronics are brutal thanks to the web.


There isn't real retail competition when they fix the retail price.


Do you really think Apple is going to give up their massive margins?








The $1,250 iPhone XS Max Costs Apple $450 To Make, Nearly A 200% Profit Margin


The teardown of Apple's 256 GB iPhone XS Max ($1,199) revealed that the actual cost of making the phone was just $443, including the price of all the phone's components as well as test and assembly costs, which is about $50 more than for last year's entry-level iPhone X (64 GB).




www.forbes.com


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## ian (Jun 18, 2016)

I do not know for certain.

I can only guess based on my working experience in the IT marketplace with hardware, software, services, and outsourcing businesses. Margins and business models.

You may not think that it looks competitive. Have you given thought to fact that the margins are so slim at the retail level that there is not very much room because of retail competition?

What is better for Koodo? To sell my spouse a cell phone at a very low or non existent margin AND get a very predictable ten year cash flow that yields a very attractive margin in each and every year.
It is an extremely attractive proposition for any carrier to yield front margin on the front end phone in order to secure that extremely lucrative high margin services business. Especially in Canada where our rates are scandalous.

Low margin is the reason why some retailers only sell phones with service contracts and why the price of the phone is sometimes higher by itself vs. when you buy it and sign up for a specific carrier service. 

The carriers are happy to push out phones at low margin if it means they can secure 5, 10 years of very predictable, margin rich, services business. That has created a real challenge for those retailers who only sell the hardware, not the services.


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## TomB16 (Jun 8, 2014)

I will just mention the Motorola boxing week sale. They have decent low and middle end phones.

I just picked up a Motorola One 5G Ace to upgrade my Moto G7 Power. The reason for the upgrade is exclusively so I can use a 1TB TF card instead of a 512GB card. I'd like to have more music with me when I fly overseas.

I've also been playing around with offline news readers. Looking at Pocket, right now. It would be nice to be able to download news and reading material while I am within wifi range and then read it while on a plane.

I know I can buy wifi on a plane but it isn't cheap, doesn't work the whole time, isn't necessary, and isn't as good as local media.


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## andrewf (Mar 1, 2010)

The component cost of most phones (BOM cost) is usually around $200-$300. The remaining price of the phone is to cover engineering, software development, marketing, retailer margins, etc.


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## sags (May 15, 2010)

The Rogers plan we have and seems to be what they offer unless you pay outright for the phone, is to buy the phone and pay x for 24 months, and then you have to pay the balloon balance owing in full or return the phone in good condition. If you return the phone you won't have a phone.

It doesn't matter if you stay with them or not. You have to pay the cost of the phone or give it back.

I just checked my plan with a new Iphone 13 512 GB Blue and I pay $42.63 a month (including taxes) for 24 months and then have to pay $528 to keep the phone.

Basically the phone cost $1500 and I will have paid almost $1000 in monthly payments over 24 months and owe the balloon balance over $500 in March 2024.

Rogers also sent a message they are raising the cost of the Ignite package by $6 in February.


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## andrewf (Mar 1, 2010)

sags said:


> The Rogers plan we have and seems to be what they offer unless you pay outright for the phone is to buy the phone and pay x for 24 months, and then you have to pay the balloon balance owing in full or return the phone in good condition. If you return the phone you won't have a phone.
> 
> It doesn't matter if you stay with them or not. You have to pay the cost of the phone or give it back.


Yes. That insane policy turned me off of Robbers despite having a 30% discount.


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## HappilyRetired (Nov 14, 2021)

sags said:


> The Rogers plan we have and seems to be what they offer unless you pay outright for the phone, is to buy the phone and pay x for 24 months, and then you have to pay the balloon balance owing in full or return the phone in good condition. If you return the phone you won't have a phone.
> 
> It doesn't matter if you stay with them or not. You have to pay the cost of the phone or give it back.
> 
> ...


$1500 for a phone, lol.

I pay about $300, use it for about 3-4 years, then hand them down to one of my parents. They use it for another 4 or 5 years. I also keep an old one as a backup and to take on trips, or to use as a music player.


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## ian (Jun 18, 2016)

HappilyRetired said:


> $1500 for a phone, lol.
> 
> I pay about $300, use it for about 3-4 years, then hand them down to one of my parents. They use it for another 4 or 5 years. I also keep an old one as a backup and to take on trips, or to use as a music player.


I paid $140 for a new unlocked Moto phone five years ago. Amazon.ca purchase. I am still using it. 

I pay $22.60 to Koodo (Telus) each month. No contract. Unlimited Canada call and text. It is all that I need since I do not keep any personal financial information, etc on it. Retired so this is all I really need or want.

My spouse is on the same plan. She pays $37.50/month. Her own Samsung phone purchased from Koodo six years ago $250. 

I plan to buy a new phone in the new year and keep the current one as a backup.

I have no desire to become a captive customer of any provider. Very happy with Koodo. BUT…if we ever become dissatisfied with the service level we can easily switch providers without penalty.


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## HappilyRetired (Nov 14, 2021)

ian said:


> I paid $140 for a new unlocked Moto phone five years ago. Amazon.ca purchase. I am still using it.
> 
> I pay $22.60 to Koodo (Telus) each month. Unlimited Canada and text. It is all that I need.
> 
> ...


I pay $40 to Koodo ($46.xx after tax) but that gives me 20g of data. I make the phone a hotspot for my laptop and TV which we use at our cabin for internet and to stream movies. I could probably get by with a little less data but the price is low enough that I don't care. We often use the cabin in poor weather so it's nice to be able to watch a movie when it's miserable outside. Unlimited long distance and text in Canada, too.


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## ian (Jun 18, 2016)

HappilyRetired said:


> I pay $40 to Koodo ($46.xx after tax) but that gives me 20g of data. I make the phone a hotspot for my laptop and TV which we use at our cabin for internet and to stream movies. I could probably get by with a little less data but the price is low enough that I don't care. We often use the cabin in poor weather so it's nice to be able to watch a movie when it's miserable outside. Unlimited long distance and text in Canada, too.


Good price. Especially since there is no contract, no obligation with Koodo.

This is what attracted us to Koodo in the first place. In the past we had experienced Rogers service in Vancouver. It was terrible in some areas of of the lower mainland. I needed it for business. Same for Shaw home internet when we first moved to Alberta.

One thing we wanted was to be able to switch com providers with no stings or residuals if the service was in the toilet. Koodo provided this, plus good service.


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