Should I Buy a Mobile Outright, or on a Plan?

Are you in the market for a new mobile phone and wondering: ‘should I buy a mobile outright, or on a plan’? With a new phone arriving on the market with each page turn of the calendar, it’s no wonder we’re constantly enticed to get our hands on the latest technology.

But when these glitzy purchases come with a four-digit price tag, it’s important to make sure you’re getting yourself the best deal possible. Let’s start by figuring out whether buying outright or on a plan is the right option for you.

Buying A Mobile On A Plan

To buy a mobile phone on a plan you’ll typically go through one of Australia’s main telecommunications (telco) providers – Telstra, Optus or Vodaphone. You’ll purchase a mobile in conjunction with a mobile plan. Rather than having to fork out for the device upfront, you will pay it off over a 24 or 36 month contract period.

When buying through a plan you will receive a SIM card and mobile phone service at the same time. This usually involves a post-paid plan which you will be billed for monthly – including your device payment instalments. Purchasing through a plan will mean that you are locked in with that telco for the duration of your contract.

Buying A Mobile Outright

Buying a mobile outright will require you to pay the full retail price for the device upfront. You then own the phone entirely and are free to shop around for a mobile plan from your provider of choice. Buying outright means you aren’t locked into any particular provider. This way you are afforded more flexibility to shop around for the SIM-only plan that works best for your needs.

Which Is Cheaper?

When you strip it back to the mobile device cost itself, there is almost no difference between paying upfront or over a period of time. Where you will start to see a noticeable price-gap is through the mobile plans that your device is bundled with.

Although paying off a $2,000 phone over 36 months sounds far more enticing than forking out the full amount upfront – large telcos are very aware of this. Usually, they’ll capitalise on the convenience of buying through a plan by attaching more expensive services.

It’s also important to remember you are locked into your contract with that provider for 24 to 36 months, depending on the plan. Should you wish to exit your contract or change provider before the conclusion of your contract, you could face some hefty fees.

Buying outright, however, can save you money by allowing you to shop around for competitive mobile plans. Smaller telcos can often have more affordable SIM-only plans that offer great value.

That’s not to say you can’t score a good deal on a mobile contract plan. Keep an eye out for promotional periods or special deals that spring up with the big telcos - particularly after new mobile models are released. Often this can be a competitive time for the big retailers, so some may include free data packages, a free month or complementary accessories. These promotional deals can even work out cheaper than buying outright.