For Verizon Wireless, what is a full retail price? - 1

Okay so my friend is 12, and she's getting her first phone. She wants to know what a full retail price is. I would kinda like to know too. Does it mean you need to pay that price monthly? She's getting a iphone 4 or iPhone 4S she doesn't know. And what is the "if your are eligible or not eligible"stuff? I'm confused. She knows about the two year contract and and the termination fee, but I don't know how to explain the full retail price. I don't have a phone yet but I know some stuff about this.

Any advice?
Please no bad comments I'm new at this.

Full Retail Price - the actual price of the phone

When cell phones first came out, they found a good way to get people locked in, and kept it. Its actually a fairly common business model, and cell companies were far from the first to use it.

So, most phones cost anywhere from $400-1000+. And that was true when phones started coming out too. Thats a LOT of money for most people. At those prices, you are only targetting people toward the higher end of middle class, already excluding over half the general population. In other words, phones are Way to expensive for the average person to have one.

So, in order to get people to start buying more phones and getting more customers, they reduced the price of the phone almost down to their own cost, sometimes below their own cost. This puts the price of most phones anywhere from free to $200+. BUT! In order to make money doing that, they have to ensure you are going to stay with their company for some time. This is where the contract comes in. You are actually over paying for your service to make up the difference in the cost of phone.

Psychologically, the buyer is more likely to spend more money that way too. Most people don't mind paying more for the service or additional parts if they think they are getting a deal on the main component. This is the exact reason why printers did not come with a cable to hook your computer to for a long time (mostly doesn't matter anymore, as most printers are network printers, but… )

In order to control all of that so people don't abuse it, they put an eligibility system in place, that defines whether or not you are eligible to purchase a phone at the reduced price with a contract. You are eligible as long as you are not in the middle of another contract. If you already have a contract, you become eligible to purchase a new phone at the reduced price usually within the last few months of your contract.

Now, if you personally don't want to deal with contracts and all that, you can pay the full retail price. At that point, you are not locked to a specific company and can put your phone with which ever company you choose. Most people don't do that, but if you have bad credit sometimes companies won't let you sign a contract, so the only way to have service is to have a phone that was not attached to the contract. Some people will pay the full retail price and do it that way, most people will just buy a used phone.

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