How do people upgrade their iphones every year?

Don't you have to pay a fee to upgrade before 2 years? I keep seeing iphones being sold at record highs every high but you have to pay a fee right? Or am I just missing something here?

Added (1). every year*

You're not missing anything. It costs something. Whether it is a new contract, new plan, a new contract price, full price, accessories, insurance, whatever. Yes has have 3 and 2 iPads but I don't rush out like that. It's the new crack for the masses is all. In a world of exploding debt, endless wars, less good jobs, disparity in our future as a whole or as persons, people honestly just use iDevices as a distraction from the crazy world around them now. Best luck.

Yes, on Verizon for instance it is an additional $30 or so per month charge to get "free" upgrade annually