The cost of owning a cellphone often comes down to picking the right carrier and plan. But increasingly, where shoppers buy their phone makes a difference, too.
Electronics retailers have been offering more aggressive deals on handsets. During the holidays, Amazon sold all its available smartphones for a penny each, while more recently, Best Buy offered shoppers an extra $50 store gift card with the purchase of any cellphone. Even without a flashy sale, experts say electronics retailers have more leeway than carriers to set lower prices for phones. Verizon currently sells that 32GB Droid Razr for $250 with a two-year contract, for example, while Best Buy has it for $150. The price for a new-contract BlackBerry Bold 9900 is $170 at Radio Shack, compared to $200 at AT&T.
Carriers usually pay manufacturers the difference between a phone's subsidized and full retail price, and the stores expect to make up any extra discount on their part with revenue from more profitable accessories and other impulse purchases, says Michael Morgan, a senior analyst for ABI Research. Todd Day, an industry analyst at Frost & Sullivan adds, "Honesty, I've started looking at it as, maybe Best Buy and other stores are the better option."
Electronics stores also have more widespread perks http://blogs.smartmoney.com/paydirt/2011/10/26/4-reasons-not-to-buy-gadgets-direct/ from loyalty programs and store credit cards that may benefit cellphone shoppers. Buying a $400 64GB Sprint iPhone at Best Buy generates enough points in the store's free Reward Zone program to earn a $5 certificate, with 150 extra points toward the next reward. Shoppers buying a $150 HTC Sensation 4G on T-Mobile at Target could cut an extra $7.50 off the bill by paying with a store credit card, which carries a 5% discount on purchases. (Pay the balance off in full, though. The card carries a 22.90% APR.)
But consumers may have a slightly longer wait for some hot handsets, says Kurt Parsons, senior director of wireless services for J.D. Power and Associates. Deals between carriers and manufacturers often allow the carriers some period of exclusivity. "Carriers tend to keep choicest phones for themselves, at least for a while," Day says. But they also make more profit from ongoing service than the phones, he says, so the waiting period tends to be short; days or weeks, rather than months.
For now, smart shoppers won't rule out any options. Carriers offer their own promotions in stores and online, many of which can't be applied to purchases made through another retailer. Independent wireless stores may have their own deals. Technophobes should consider the service aspect, Morgan says. Online-only deals often offer lower prices, but both carrier stores and electronics retailers offer on-site activation and other assistance. "When you walk out of the store, your phone is up and running," he says.