Call Me Maybe: Why my $783 unlocked iPhone is a ringin’ deal

Most people would never pay $783 for a smartphone. I’m not most people.

After crunching the subsidized cell phone math and multiplying the mobile contract costs, I came to the conclusion that buying an unlocked iPhone 5 outright from Apple with zero ties to any contract-wielding carrier is a ringin’ deal.

unlocked cell phones

I am stunned by the savings. I’m also surprised more mobile users don’t skip subsidized cell phones altogether by doing a little number crunching to see if the price paid for long-term contracts makes that seemingly cheap cell phone a real deal.

What’s an unlocked phone? An unlocked cell phone is not tied to the carrier you bought it from and can be used with most mobile carriers anywhere in the world by swapping something called a SIM card. I explain this process below, so no worries.

prepaid cell phones

While the math uses the numbers from my situation — I’m a Canuck, I use data sparingly, I travel — I think the logic can be applied to your lifestyle, wherever and however you live.

Since this blog is about being a smarter, less spendy consumer, I’m going to walk you through my decision to spend a whopping $783 on a freaking smartphone. Your milage may vary.

1. Are you wanty or needy?

I have happily used my relic of a cell phone for the past 7 years, and I wrote about resisting the call of new phone technology in Do you really need that upgrade?

Do you really need that upgrade?


Do you really need that upgrade?

Mobile phones are big upgrade targets, but any other widget or gadget is fair game too. Before pulling the trigger on that new device, maybe it's time to stop and think.

Read More »

While I’m awesome at delaying gratification, there comes a time when technology becomes unusable, deprecated, or broken. The world (and internet) have changed drastically since I starting using my 2006 candybar cell, and not being able to text friends, check my email, or do bloggy-related things online made my old phone a major liability.

The Computer Apocalypse: Three signs you need to upgrade


The Computer Apocalypse: Three signs you need to upgrade

An easy-to-follow guide for upgrading your computer on a budget.

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iPhone, Android: So many smartphone choices!

So why choose a costly unlocked iPhone 5 16GB model over something less expensive, like the unlocked Google Nexus 4 16GB? Simple, I wanted an iPhone. 😀

iphone 5

I love working in the Apple ecosystem, and spending more for an operating system, the applications, and hardware I prefer is worth it to me. This was also a budgeted spend, so I spent some time saving for the upgrade.

Bottom Line: My unlocked iPhone 5 16GB cost $699 + 12% tax = $782.88CDN. Before pulling the trigger on a shiny new smartphone, do yourself a solid by researching the features you can’t live without, the cost you can afford, and compare the options in the marketplace — you could save some money if a lesser model works for you. Tutorial: Which phone should you buy? | CNET.

2. With no costly contract, I can quit you!

I have a few reasons for being cell phone contract averse. First off, Canadians have the world’s longest mobile phone contracts — sign up for a subsidized phone with one of the big three carriers (Bell, Rogers, or Telus) and expect to be on the hook for three long years.

Need to move, lose your phone, or want to upgrade? Good luck! Contract termination fees can cost you hundreds, even if you’re staying with the same carrier.

Also, with so few carrier options, studies show that mobile service in Canada is overpriced and anti-competitive. Americans don’t have it cheap either. The most recent Open Technology Initiative (OTI) report compared cell phone prices and packages across the globe, and found US mobile customers pay the world’s second highest rate of $59.99 for a complete cell phone package. Canadians are the big losers in the mobile space, paying a chart topping $67.50 for voice, text, and data plans. Wheeee!

Comparing contract and prepaid options

Being dialed in and handcuffed to a contract and carrier was never my preference, but I still ran the numbers using the tools that have saved me money over the years — my brain and a spreadsheet.

prepaid cell phone plans

Mobile nerds can open my mobile cost comparison spreadsheet, but I’ll just tell everyone else the results. After comparing the cheapest cell plans offered by Rogers, Telus, and Bell, the numbers were so uncompetitive and similar that averaging a price with a subsidized iPhone 5 was so easy-peasy, it kinda made me queasy.

3-Year Contract Averages:

  • Average subsidized iPhone 5 16GB cost: $216.60
  • Average monthly bill: $55.53
  • Average contract length: 3 years

Total Contract Cost: $2,215.68

I then compared the monthly cost of going prepaid (aka Pay-As-You-Go) with PC Telecom and Koodo Mobile, a subsidiary of Telus with plans that let you carry-forward unused voice and data balances.

prepaid cell phone plans

After pricing out SIM cards, base plans, and calculating data needs, my preference went to Koodo Mobile for flexibility and a low $26.32 per month cost. The ability to save unused balances appeals to my squawky senses.

Bottom Line: After doing two basic mathematical calculations known as addition and multiplication, I came to the conclusion that opting for a prepaid plan could save me nearly $30 per month, or just over $1,000 in monthly fees over three years. Going prepaid with an unlocked phone also gives me the flexibility to swap SIMs and switch providers if a better deal comes to town. Tutorial: Step-by-step Guide: How to Save Money on Your Cell Phone Contract | Young and Thrifty.

Since I want you to get mobile and research your own scenario, use my free compare cell phone plans spreadsheet to help you calculate your total talkin’ and textin’ costs.

Spreadsheet: Compare cell phone plans to save money


Spreadsheet: Compare cell phone plans to save money

Compare cell phone plans and save money with this easy-to-use spreadsheet.

Read More »

I’m into sharing the savings ’cause I’m cool like that.

3. Roam far from home, for far less.

Use your cell phone outside your local area or travel to another country, and you’ll likely get whacked in the wallet by crazy high roaming charges. Bell Canada issued this Canuck a $9,350 data roaming bill after his visit to Israel, but excessive smartphone roaming fees can happen during quick jaunts to neighbouring countries too.

It’s no shocker that Canada is known to have some of the world’s highest roaming rates. Americans may have greater choice in the mobile market, but there are cases where roaming Yankees got stuck with a $10,000 phone bill too. Heck, this Verizon customer racked up a $1,500 cell phone bill in 12 days thanks to a little travel. Not awesome.

Local SIM cards and unlocked phones can save you money.

There are a number of ways to beat roaming fees while traveling abroad — my favourite method is to buy a local SIM card for my unlocked phone and use that region’s cheapest prepaid phone plan while on the road.

prepaid sim card

A SIM card is a small, thumbnail-sized chip that stores your phone number and personal information. When your cell phone is not locked to a specific carrier, you can easily switch networks by swapping the SIM with one from a local service provider and avoid exorbitant roaming charges.

sim card

Bottom Line: It’s hard to calculate my total roaming savings at this early stage, but I think it’s fair to say that my $783 unlocked iPhone 5 can potentially save me hundreds, even thousands, in excessive roaming fees since I have the flexibility to pop my SIM and access any local network in the world. Tutorial: Stay in touch without racking up big wireless bills | Consumer Reports and Using Mobile Phones in Europe | Rick Steves.

4. Avoid ‘bill shock’.

So there’s this terrifying thing called bill shock. It happens when you unknowingly go over your plan’s voice or data limits and your provider charges you dearly for the overage, without warning. The shock part happens when a defibrillator is needed to revive your body after your brain realizes the financial impact of that massive cell phone bill.

no contract cell phone service

I have every reason to be terrified of bill shock, especially since Canadians have little protection and warning when they’re set to hit data limits. Heck, Canuck wireless providers question the need for ‘bill shock’ protection — this despite the Federal Communications Commission (FCC) putting pressure on mobile carriers to adopt ‘bill shock’ warnings for Americans back in 2011. Guess what? The FCC won.

By April 2013, more than 97% of American wireless customers will get automatic usage alerts when consumption of data, voice, text, and international charges approaches or exceeds plan limits.

I think Canadians should be grumbling. Now grumble louder.

Prepaid plans can protect against ‘bill shock’.

Prepaid phone plans are akin to fueling up your car at the gas station — you know exactly how much you’re paying up front, and you are given fair warning before the juice runs out.

So why do people balk at topping up a prepaid plan when they’re consuming more data? I love ‘paying as I’m going’ since I’ll never go over my limit, I find it easier to stay on budget, and those dang mobile carriers can’t zap me with bill shock.

The challenge is finding a competitive prepaid plan with a locked phone. Good luck with that.

Bottom Line: Paying the big bucks for an unlocked cell phone and opting for a prepaid plan can save you money by helping you to stick to a usage limit, capping spending, and avoiding the dreaded bill shock.

5. Unlocked smartphones have a high resale value.

Before dropping $783 on my brand new unlocked iPhone 5, I searched a slew of online classified sites to see if a used unlocked iPhone could be had for less. Wading through the used locked iPhones was a hassle, especially since most were being sold with a 2-year contract still attached!

After nearly laughing my a$$ off, I discovered that gently used unlocked smartphones are pretty decent at keeping a high resale value. I had no luck finding the phone I wanted though. Oh well!

Bottom Line: Selling an unlocked smartphone is far easier than one locked to a carrier. If you like upgrading your mobile gadgets often, choosing to pay more up front for an unlocked device could save you a bit of money since the resale value is decent.

So where am I going with this?

Most people would never pay $783 for an unlocked smartphone. But maybe more people should? After adding up contract costs, comparing unlocked and subsidized phone options, fearing bill shock, and popping SIMs to avoid roaming fees, I think maybe it’s time to rethink how we buy cell phones.

unlocked cell phones freedom

Given my cell situation I’m set to save a minimum of $480 over the next three years by paying $783 outright for my fancy unlocked iPhone 5. And these savings do not account for potential overages, roaming fees, and other gotchas an inflexible contract might cost.

How much would you have saved by ponying up the cash for that pricy cell before locking into a lengthy phone plan with a greedy service provider?

Maybe it’s time to do the math.

It’s your call.


Your two cents:

  1. Sherry July 2nd, 2013

    Hey Kerry, why the iPhone 5 and not the 4 or 4S?

  2. Valerie July 29th, 2013

    When it was time for a new iPhone last year – I too decided to buy one unlocked! I’ve saved so much money. Last year I travelled to west Africa and also Thailand. I was able to buy local SIM cards and pay as you go data and voice – so cheap!! Only $1 for the SIM card in Ghana. Now I’m living in Panamá and never pay more than $20 a month for my voice AND data on my iPhone! Back in Canada my monthly bill was never less than $85 when I was on a contract. Never again.

  3. Raquel August 12th, 2013

    In my case, I always found it cheaper to go on a contract than prepaid. Just my personal opinion. I use my cellphone quite a lot, and do not use a land line. Lately, I have been using the maps/gps (as I just moved to suburbs from Toronto), and have been using some money-saving apps (Checkout51) while at the store, and my email when out and about. So, having data has been useful when there is no wifi connection (which I found that only McDonald’s, Starbucks or Tim Hortons to be the few places that I can connect to wifi).
    I have been with Rogers for a few years now, and every now and then I have asked for discounts. This spring, they allowed me to upgrade from my blackberry 9780 to an iphone 4s (while still under my 3 year contract) for free! I just had to send the phone back (which I paid $50 for 2 years ago), and the iphone was brand new (not refurbished) as it was sealed. I had to add data, since my plan before was a blackberry data add-on. They gave me an offer of adding 500 mb for $5 more or for another $5 for 1GB (or the same $5 for 6gb) so I took the 6GB offer, since I felt it to be the better deal. I did some research and many people have advised me that 500mb is not a lot on the 4s. My current plan is:
    -300 day time minutes
    -Unlimited after 6pm (free weekends)
    -Unlimited Network Calling (Rogers Home, Fido and Rogers customers) – which I use probably 2,000 minutes a month.
    -Caller Id, Voicemail, 2500 text messages
    -6GB of data
    all for $56.08, which includes 13% tax and the silly Government Regulatory Fee of $2.13 (in Ontario).
    I have thought about not having data, but I just personally feel that having a smartphone with no data defeats the purpose of having a smartphone.

  4. Passerby August 18th, 2013

    While this works for GSM phones (i.e. those with SIM cards) this isn’t as doable for CDMA phone (i.e. those without SIM cards). With CDMA phones you won’t be able to swap out a local SIM card while traveling to avoid international roaming charges. I don’t know what percentage of the Canadian smartphone market is GSM though, so it might be that you guys don’t have a choice as to what to buy.

  5. m September 1st, 2013

    Perhaps Telus has a habit of lying to me, but any time I’ve brought up the Sim situation in regards to swapping sims and bringing in unlocked phones. . .swapping sims ect, they have ALWAYS insisted that when you bring a phone to telus or any other Canadian provider your phone BECOMES locked to that carrier when it first sort of ‘sets up’. This would mean that even if you are feeling hacky – or are okay spending the $30+ every time you want to switch, your ‘unlocked phone’ is just as much of an annoying pain in the ass as the phone the carrier would sell you pre-locked to them.

  6. Chris Pollard January 18th, 2014

    Last year we had to deal with switching cell companies because of a buyout (DMTS->TBayTel). We went from a shared plan costing us $45/month for two lines to $95/month for essentially the same plan. DMTS never sold locked phones, so the ones we had carried over by swapping SIM cards. But we had just entered new two year contracts the previous summer. Those carried over … sort of.

    Last March, TBayTel launched a $50/month ‘unlimited’ plan. That’s unlimited local, unlimited Canada-wide long distance, unlimited long distance to the US, unlimited international texting, voice mail, caller ID, and 6GB of data. At this point I had already changed phones to the Nexus 4 (still a phenomenal phone – glad you mentioned it, appreciate you told us your reason for going with the three times more expensive iPhone!) – so I was still unlocked. But the contracts were still there. So I asked how much it would cost to buy out the contracts, knowing what it would have been through the old carrier. Turned out it was just $120/phone! So I did both buyouts, added the new plan to both phones, and am now fully unlocked and contract free for my wife and I. And since we now had ‘free’ (okay, ‘included’) long distance to the US, where my wife is from, we also removed the $25/month unlimited US long distance plan from our home phone line.

    Since we travel to the US several weeks every year, and have three unlocked phones, (I kept my previous Galaxy S2 when I bought the Nexus 4) we have options. I’ve gone the route of getting an AT&T prepaid SIM when we drove down to Texas a couple of years ago. Last year I tried out Roam Mobility when they did their free SIM swap promotion. Turned the expired AT&T SIM into a Roam Mobility SIM. Roam uses T-Mobile’s network, and admittedly the coverage is NOT as good as AT&T’s. But I can order up voice/data service through their website for a single day or multiple days, or a full month if I need it. Our last trip down, I signed up for service the days we were driving down, a couple of days we were taking side trips, and again the day we drove home. At $4/day, it cost about $20 to put the SIM in my old S2 and turn on the wifi hotspot in the car so we all had internet access. Our regular phones were on roaming, but we didn’t answer any calls, and our plan includes 100 free US roaming texts a month too. So we could still text from our regular cells. Worked out very well! And sure beats the $5/MB roaming data fees … and 70/80 cents/minute for roaming calls! Oh, and Roam includes unlimited calling/texting in the US AND back to Canada as well.

    But you can’t do this sort of thing with carrier locked phones. That’s why they lock ’em!

  7. Mel April 20th, 2014

    I bought my iphone 4 unlocked 3 years ago. It was expensive at the outset but looking back it’s one of th smartest purchases I have ever made. I’m a big traveller and have taken it to a number of countries and have always had an easy cheap time using it wherever I am in the world. I now have a bag of SIMs I keep in my wallet and just swap out for the one I need on the plane and I’ve got phone service as soon as I touch down! It’s great! I would never go back to a locked iphone!

  8. Brenav May 18th, 2014

    Unlocked is the way to go. I’m not a heavy cellphone user, only 10-15 calls per week, mostly under a minute each time. Had an old iPhone 3G my wife no longer was using, and had it unlocked for $23. I don’t need a data plan. Really, who does need a data plan these days? You can’t text while driving, and there seems to be a Tim’s, McDonald’s, or Starbucks on every corner and highway off ramp, so if you have to use data, free wifi is only several minutes away. I use pay as you go, through a 7-11 speakeasy plan. You can buy as little as $25 for 100 minutes, and it’s good for 365 days. No contracts, no activation fee!
    To reduce the minutes I use, while at home I use google Hangouts. It allows me to call any cell or landline number in the US and Canada for free.
    Travelling is where an unlocked phone becomes even more advantageous. More airports offer free wifi, and if they don’t, sit yourself outside the entrance of an airline’s customer lounge, and you can often tap into their wifi for free. At your destination, most airports have SIM card kiosks near the baggage pickup area, so you can buy a new SIM card for that country real cheap. While travelling in your destination, most big city hotels have free wifi in their lobby, so if you need data, walk into any big name hotel, and use their wifi.
    Lastly, if you travel a fair bit, you really need to look into having a dual SIM card phone, as it gives significant advantages. You can operate on two different networks at the same time, and allows people back home a means to contact you using your normal phone number, while you have a local number with the other SIM card! At a very cheap rate, all at the same time. They can be bought for as low as $99, with a Cadillac version – like the unlocked Samsung Grand 2, selling for $300.

  9. Derek April 8th, 2015

    Great article Kerry! For your US readers, I wanted to share a nifty cell phone plan comparison engine that I made to help people unlock the “truth” and “freedom” of these no-contract plans! I’d be happy to answer any questions on no-contract plans you may have.

    Thanks again!

  10. Julie September 6th, 2015

    Just building on Brenav’s comment two above – I just did something similar to replace a lost phone. Bought an unlocked iPhone 4S with cases, etc. on Kijiji for $150 (met with the guy to ensure reputable, not stolen, etc.). I was already with PC Mobile – their pre-paid option appears very similar to 7/11. Anyway, bought their $10 SIM card and telephone customer service “ported” my number (as well as my plan and credit in account) from the lost phone to new phone and guided me through easy set up which took 5 mins. Very easy. I’m with Brenav that tapping into wi-fi for data works well for me. PC has an option where you can pay $2 for a day’s data if you want which helps in a pinch.

  11. Melina Wood June 1st, 2016

    Hi, Kerry! Thanks for the great article. I was travelling around South America recently and before going, got my phone unlocked. It truly does help a huge deal to have an unlocked phone when travelling. It helped a lot in contacting my folks back home, without having to pay roaming fees. I simply bought a local SIM for each country. Instead of using the service of my phone network before the trip though, I opted for one of those sites that offer to unlock your phone for free, called UnlockYourSim. It worked as well and saved me even more money! Thank you again. Hope this helps anyone interested as well 🙂

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