How Often Should You Update Your IPhone? Experiment
I am a fan of gadgets. I love having the latest and greatest phone. But my wife is more frugal – she’d better sink her phone into the ground before upgrading. But is renewing every three years really more cost-effective than renewing every year? I checked a few numbers to find out.
Subsidized contracts are practically dead , which means that in most cases, the most cost-effective way to upgrade your phone is to sell your old one and use that money to (partially) pay for the new one. But I’ve always wondered if it was more cost effective to sell my old phone earlier while it still had value, or to throw it in the ground. What will ultimately save you more money?
What are the old iPhones selling for now?
Here’s my theory: if we can look at the average market price for the last few generations of iPhones, we can use that to estimate how much value your iPhone is losing every year. So, the price of the iPhone 6 in September 2015 estimates the value of the iPhone after it was one year old, the iPhone 5S estimates the value of the iPhone two years ago, and so on. From here we can calculate how much it will cost you to upgrade each model to the latest phone version.
To calculate the average selling price, I looked at the “Average Price of Recent Sales ” on Swappa for the lowest version of the phone on all four major carriers, as well as the unlocked versions. I averaged these 5 prices together to get the “average” price for this phone at the time of this writing. These numbers will change quickly after the announcement of the new iPhone, but the overall trend should remain roughly the same.
I also did a similar search in my area on Craigslist, which is not the best test, but followed a very similar trajectory to the numbers from Swappa. I also checked out ThePriceGeek , which finds average selling prices on eBay. Phones lose value a little faster on eBay, but that’s okay – I still don’t recommend selling your phone there (I’ll cover that a bit). You can view the data I have collected in this table if you like.
These calculations, of course, are far from scientific. It’s simple math at best, but it’s the best I could do with the data I had. It’s impossible to predict how much your phone will drop in value next year, how much the phone you’re upgrading to will cost, and so on. Maybe your current phone is not in very good condition, or maybe you were in luck and sold it for more than it really was worth. But while keeping the playing field as level as possible, I found a trend: the iPhone tends to lose most of its value in the first two years, after which it loses a little less per year. (According to my research, this trend is not spreading to Android phones – only iPhones, for which demand has become more stable over time.)
How often do you need to update?
So, with this information at hand, I figured out how much it costs you to sell your old phone to buy the latest model every one, two and three years. (You can sell it after four, but by then, your phone’s performance and battery life will have hit a lot, so most people will probably upgrade to that.)
To do this, I subtracted the phone’s “market price” from its original list price ($ 650 for each iPhone) and then multiplied that by the number of years to see how it would affect you in the long run. Since we measure every year, two and three years, let’s take 6 years as the lowest common denominator. Here’s what I found:
- If you update your iPhone every year for six years, you will spend $ 1,014 .
- If you update your iPhone every two years for six years, you will spend $ 1,044 .
- If you update your iPhone every three years for six years, you will spend $ 932 .
- If you update your iPhone every four years for six years, you will spend $ 817 (adjusted for a six-year period).
Again, you can see the complete math in this table .
Looking at these numbers, it seems that it is most cost effective to sell your phone every three years or more, but only on the nose . This will save you about $ 100 (plus tax) over six years on Swappa. If you use my Cragslist numbers it will be closer to $ 160. What’s even more interesting, the sales of your phone every year and every two years are pretty darn close. So if every three years is too much for you, you can update every year and have the latest and greatest version!
Also note that depending on your state’s sales tax, these numbers could be the same, slightly higher, or much higher (damn you California). So do it yourself to see if it’s worth it for you. You can always make up for those numbers by buying the latest phone that has had little use a few months after it was released.
Where to sell your phone
Much of this math depends on one very important fact: you should be selling your phone using a site that doesn’t charge a ton of additional commissions. eBay is not the best place to sell because the more your phone sells, the more they charge you, which significantly changes the math above.
Instead, sell your phone on a site like Swappa , which charges a flat fee no matter how much your phone sells. Or sell on Craigslist or a friend. Just don’t sell anywhere where high commissions are charged. I also don’t recommend selling it on Amazon or Gazelle – of course it’s a little easier, but you get a lot less money back .
( Update: The day after this post was written, Apple announced its own early update program, but like other early update plans , you’re probably making more money yourself selling it every year . )
Also remember, the sooner you sell your phone before a new model is released, the better. The longer you wait, the more money you will lose on the upgrade.
Verdict: update whenever you want
After all, the difference is not big – selling every three years gives you an extra $ 100-200 after only six years, depending on where you sell. If you are the humble type of person, this may be a lot for you. But if you like upgrading, $ 15 to $ 30 a year is a small price to pay to always have the latest phone. You just need to sell your old one and keep it in good condition .
Of course, this is not the case for those of you using an early upgrade or rental plan like T-Mobile. This applies to buying a phone outright, or (in most cases) funding plans where you have to pay for your phone over two years. You might have to compare it to your own contract to see how it stacks up, but for those of us outside of the contract (which now includes a lot of Verizon, AT&T, Sprint, and T-Mobile customers) it’s not a bad plan. So sell these phones!