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T-Mobile iPhone 5 & Samsung Galaxy S4 Pricing Explained

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First Posted: Mar 27, 2013 12:31 PM EDT
Signage for a T-Mobile store is pictured in downtown Los Angeles, California August 31, 2011.

Signage for a T-Mobile store is pictured in downtown Los Angeles, California August 31, 2011. Credit:Reuters

T-Mobile's whole un-carrier branding, smartphone pricing and service might seem a little confusing. Let's break it down so you can decide if T-Mobile's new approach of doing business is something you might be interested in.

It was a long time coming, but it has finally happened. T-Mobile has become the last of the four major U.S. wireless carriers to begin offering its customers the iPhone. T-Mobile will begin selling the iPhone 5 on April 12 and the Samsung Galaxy S4 on May 1 in stores and online beginning at $99. Don't be shocked at the $99 price, that's part of T-Mobile's new plan. The carrier will allow you to purchase the iPhone 5 16GB or Samsung Galaxy S4 16GB for $99 down, and you will then be charged $20 per month over the next 24 months for the hardware.

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What T-Mobile is essentially doing is similar to the car business. You only need to put a certain amount of money down before you can drive off the lot with your new car, but you'll be paying for the remainder over a period of time. It's basically a contract, even though T-Mobile is trying to banish the word "contract" from its vocabulary. The carrier is just making it easier to get the latest and greatest device without having to pay the full price before leaving the store.

SlashGear has provided a breakdown of how T-Mobile's hardware pricing strategy works on the iPhone 5, and it should also be the case for every device the carrier will offer. T-Mobile will charge $99.99 as a down payment to bring the iPhone 5 home; the carrier will add $20 per month to your bill for 24 months. T-Mobile's pricing beats every carrier's total cost over time.

With your T-Mobile purchase, you'll be paying $99.99 USD down for starters — that's half the price (essentially) of the $199 you'll pay if you're purchasing the device with a two-year contract with any of the top three mobile carriers in the USA.

1. $199 with subsidy costs built-in to your data/voice/text plan (you can't see it, but it's there).
2. $649 (we'll stick to the 16GB version since T-Mobile is advertising that model as its hero with $99.99 down and so forth)
3. $579.99 ($99.99 down with $20 per month for 24 months)

So why would you want to purchase an off-contract iPhone 5 from Apple for $649, then have it working with T-Mobile data? You wouldn't. That's absurd. If you want to purchase an iPhone 5 to use with T-Mobile, you can do so cheaper by buying it from T-Mobile with its "Simple Choice Plan" structure.

Purchasing an iPhone from AT&T, Verizon, or Sprint for a subsidized price of $199 will cost you much more in the long run than T-Mobile's new plan. Does this sound like a good idea? Let us know in the comments.

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