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Is Apple’s iPhone Upgrade Program Cheaper than Buying Outright?

The premise of Apple’s iPhone Upgrade Program is simple: you pay Apple a monthly subscription-like fee and, in return, they give you AppleCare and a brand new iPhone every year. But is that a better value than just buying your phone outright?

Let us assure you this isn’t simple an abstract exercise. Like you, we want the best value, in terms of both time and money, when it comes to our phone upgrades, and we’ve crunched the numbers forwards and backwards to highlight the benefits (and pitfalls) of the different ways you can keep your phone completely (or nearly) current.

So is the Upgrade Program a reasonable approach to keeping your iPhone current that may or may not be cheaper than just paying cash for a new phone every year? Let’s look at the numbers over four years of phone ownership to see how it all shakes out.

Before we dive into our methodology for calculating the cost and benefits of different upgrade plans, let’s first take a look at the upgrade plan’s fine print so readers unfamiliar with it are on the same page.

Inside the iPhone Upgrade Program

Introduced in 2015, the basic premise of the iPhone Upgrade Program is simple. You hit up the Apple site or an Apple store and pick out a current model phone—as of the time of this writing that would be the iPhone 8, the iPhone 8 Plus, or the (about to be released) iPhone X. They divide the cost of the phone + 2 years of AppleCare by 24 and the result is your monthly payment.

Let’s say you wanted to get the iPhone 8 Plus with 256GB of storage. Your cost would then be $949 (for the phone) + $149 (the cost of AppleCare for that model), divided by 24, for a monthly (no interest charged) payment of $45.75.

After 12 payments your iPhone is eligible for a “free” upgrade. Visit an Apple Store to swap it out or hit up the Apple website to request an upgrade kit (they sent you a new phone and a mailer to return your current phone).

At the end of 24 months the phone you have is yours to keep or you can sign up again to roll right over into a new 24 month cycle and keep the 12 month upgrades going.

While you have the benefit of avoiding any sort of interest charges on your purchase, there are two downsides to the Upgrade Program. First, you’re locked into the contract for 24 months. Second, you must pay for AppleCare even if you feel you don’t need it.

How Does the Upgrade Plan Compare?

For the sake of comparison, we’re going to assume that the goal of anyone considering the iPhone Upgrade Plan or a parallel purchasing strategy is to have the newest (or nearly newest) iPhone at all times.

With that in mind, we crunched the numbers on five potential phone purchasing paths projected out over 48 months of iPhone ownership starting with the iPhone 8 Plus 256GB model as the initial purchase. Why 48 months? We wanted to be sure there were no benefits or irregularities overlooked by sticking to the shorter 24 month cycle.

Here’s how each of the projections worked out in terms of cost. Each entry below outlines our methodology for that particular plan.

The iPhone Upgrade Plan (Total Cost: $2,196)

If you purchase the iPhone 8 Plus with the required AppleCare, your cost per month for the duration of your 24 month contract is $45.75. You can upgrade your phone to the next model (iPhone 9 Plus, perhaps?) in 12 months.

We presume you then re-up your upgrade contract at the 24 month mark and keep trucking with another upgrade at 24 months and again at 36 months. At the end of the 48 months you’ve had continuous AppleCare coverage and have a phone that is three models newer than the one you started with. Your total time investment was 4 visits to the Apple Store to purchase and subsequently upgrade your phone or 4 visits to the site to do the same (plus the time it takes to backup your iPhone and transfer the data to the new phone). Your total cost is $2,196.

Pay Cash for New Phone Every Year + AppleCare (Total Cost: $2,144)

Let’s say you prefer to buy your phone outright and you want AppleCare protection. Fair enough. You plunk down $949 for your iPhone 8 Plus, and $149 for AppleCare.

A year later you want to upgrade your phone. You plunk down another $949 and transfer your AppleCare to your new phone (AppleCare is transferable to a new same-category product within 30 days of the new purchase). We presume you can sell your premium previous generation iPhone for ~$650 based on our analysis of data regarding the sale price of year-old premium iPhones.

At the end of the 48 months you’ll have spent $2,144 plus the time sink of dealing with selling your phone and swapping over your AppleCare. The total savings for your flip-it-yourself effort over the Upgrade Program is a whopping $52.

Pay Cash for New Phone Every Year, No AppleCare (Total Cost: $1,846)

If you follow the same cash purchase + flipping your phone every year to offset your costs, but ditch the AppleCare you can save a bit of money.

By opting for no AppleCare on your phones during the 48 month period you save two payments of $149 (one per 24 months) as well as time and hassle of swapping your AppleCare between device.  Your total cost lowers to $1,846.

Consider, if you’re on the clumsy side or your kids have a burning hatred of pristine iPhone screens, however, that two screen replacements in that 48 month window will erase any skipping-AppleCare-savings.

Pay Cash for New Phone Every 2 Years + AppleCare (Total Cost: $1,821)

At this point we’re getting away from the spirit of the new-phone-every-year Upgrade Program, but we’re nothing if not thorough.

If you pay cash for your iPhone under the same circumstances (new iPhone 8 Plus for $949), slap on the Apple care, but you keep your phones for 2 years before flipping them ( data indicates 2 year old formerly-premium phones go for ~$375), you’ll end up with one upgrade over the course of the 48 months at a total cost of $1,821.

Pay Cash for New Phone Every 2 Years, No AppleCare (Total Cost: $1,523)

If you follow the two year and flip model, but ditch the AppleCare, you’ll arrive at the lowest cost option in our number crunching experiment.

At the end of 48 months you’ll have upgraded once and, fingers crossed you didn’t damage your phone at any time during that long run, avoided AppleCare premiums or repair fees. Your total cost is $1,523.

The Verdict: The Upgrade Plan Is Perfect for (Impatient) iPhone Fans

The take away from our every-which-way number crunching experiment is straight forward. There’s a clear best course of action for people depending entirely on their desire for a zero-friction experience and their need for AppleCare.

Despite the somewhat negative press the program has gotten, the Apple iPhone Upgrade Program is actually a surprisingly good deal for Apple fans that 1) want the newest iPhone with no hassle and 2) want the protection of AppleCare.

The difference in cost between letting Apple handle everything for a small monthly payment or paying a big lump sum of cash and handling flipping your iPhones yourself and transferring your AppleCare is a measly $52. Over our 48 month projection that saves you ~$1 a month. The Upgrade Plan is the clear winner here for anyone that wants AppleCare, despite not being technically cheaper than doing the work yourself.

If you’re very confident that you’ll never need to call on AppleCare, however, then things get a little competitive in projected plans. In the new phone every year, no AppleCare, you do the flipping plan, the cost is $1,846 over 48 months which is a savings of $350 (or ~$29 per month) if you manage to avoid any out of pocket repair costs.

The clear winner for the “AppleCare? We don’t need no stinkin’ AppleCare” crowd, then, is to pay cash, upgrade and flip your old phone yearly, and save. The clear winner for anyone else who wants a shiny new iPhone every year (and AppleCare to come to the rescue when they inevitably drop their all-glass phone) is the Upgrade Program.


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