The iPhone 5 can be purchased in two different ways: either from a network provider with a contract or directly from Apple as a SIM-free handset without a contract.
Buying your iPhone 5 on contract means that you’ll get a discounted handset upfront, but the flipside is that you’ll pay more for the length of your contract. You’ll also be tied to the same network provider for 24 months.
The alternative is buying your handset SIM-free from Apple. This means paying more upfront but it’ll allow you to benefit from cheaper SIM only deals such as giffgaff goodybags. Over the course of 24 months, it often works out to be substantially cheaper to take this second option.
Note that giffgaff does not currently provide Nano SIMs directly. giffgaff will be provide official Nano SIMs soon but in the meantime it is possible to cut your own Nano SIM down to size.
Apple iPhone 5 Price Comparison
It’s not always easy to compare mobile phone contracts: contracts all differ in terms of how much you need to pay upfront and how much you need to pay in subsequent months during your contract period.
When comparing contracts, the most important figure to consider is the “total cost of ownership”. This is a figure that takes into account both upfront costs and monthly costs and gives a total figure of how much you’d pay.
The total cost of ownership is calculated as follows:
Total Cost of Ownership = Upfront Cost + (Monthly Cost x Number of Months)
In other words, the “total cost of ownership” is the total amount that you’d pay over 24 months (or however long your contract is). In the graphs below, we’ve compared the total cost of ownership of using an iPhone 5 on giffgaff and on contract.
Average Users – 250 minutes per month
The “average” consumer in the UK makes around 250 minutes worth of phone calls each month.
The cheapest suitable iPhone 5 contract is O2’s On & On tariff which offers unlimited calls, unlimited texts and 1GB internet for £26/month plus £249.99 upfront. The total cost of ownership over 24 months is £874.
For comparison, it is possible to buy a SIM-free iPhone 5 directly from Apple for £529. This will allow you to take out giffgaff’s £10/month goodybag which comes with 250 minutes, unlimited texts and 1GB internet (following the November price changes). The total cost of this option comes to £769 – an entire £105 less than the cheapest contract option.
The following table shows the cheapest tariff by network for somebody making 250 minutes worth of calls each month. The total cost of ownership is shown on the right-hand side of the figure with the blue and red bars showing the breakdown amongst upfront costs and monthly costs.
Note that many of the network providers in this comparison have contracts available with a fewer amount of minutes (e.g. 300 minutes). Whilst these contracts may seem more appropriate for our comparison, the total cost of ownership is often even higher on these contracts. We have selected the best value tariff on each network with the lowest total cost of ownership for this comparison.
Heavy Data Users – Unlimited Internet
If you love to use apps and you browse the web on your smartphone regularly, you may benefit from an “unlimited data” tariff. Three, T-Mobile and Orange all provide iPhone 5 contracts with “unlimited data”.
The cheapest “unlimited data” contract is Three’s “Ultimate Internet 500”. You’ll get 500 minutes, 5000 texts and unlimited internet for £34/month plus £79 upfront for the iPhone 5. The total cost of ownership over 24 months comes to £895. On T-Mobile and Orange, the costs are even higher for an unlimited data contract: you’ll need to pay £973 and £1,224 over 24 months for unlimited data.
giffgaff has a £12/month “unlimited data” goodybag available with 250 minutes and unlimited texts. With £529 upfront for a new iPhone 5, the total cost of ownership over 24 months comes to £817: £78 cheaper than the best value contract from Three.
Frequent Callers – 400 minutes per month
If you call frequently from your mobile phone (for around 400 minutes each month), the best value contract is O2’s “On and On” which costs £26/month plus £249.99 upfront for unlimited calls, unlimited texts and 1GB internet. The total cost of ownership over 24 months comes to £874.
For comparison, giffgaff has a £15/month goodybag with 400 minutes, unlimited texts and unlimited internet. You’ll also get unlimited free giffgaff-to-giffgaff calls. With an upfront cost of £529 to buy a new iPhone 5, the total cost of ownership comes to £889 over 24 months.
Price Comparison to Shorter Contracts
If you’re looking for an iPhone 5 contract with a shorter commitment, T-Mobile offers a range of 18 month contracts whilst Vodafone and Tesco both offer a range of 12 month contracts.
For 18 month contracts providing 250 minutes per month or more, giffgaff compares as follows:
The total cost of ownership in this table is calculated over 18 months.
For 12 month contracts providing 250 minutes per month or more, giffgaff compares as follows:
The total cost of ownership in this table is calculated over 12 months.
Giffgaffing your iPhone 5
When you purchase an iPhone 5 directly from Apple, it’ll be SIM-free and won’t be locked to any network. This means there is no need to unlock it. You’ll only need to unlock your iPhone if you originally purchased it from a different mobile operator.
As the iPhone 5 accepts nano-SIM cards, you won’t be able to use one of our standard SIM cards in the iPhone 5. giffgaff are currently working on releasing official nano-SIMs but in the meantime you can cut a SIM card down into a nano-SIM.
Tariff details correct as of 24th September 2012. Source: PAYGvsContract.com.
Ken Lo maintains PAYGvsContract.com, a price comparison calculator comparing giffgaff goodybags against Pay Monthly contracts.