Why is the iPhone 5 only $199?

I'm going to buy an iPhone 5 online. I went to check how much they were first to only see they're bizarrely $199 for 16gb? Why is this?

That is the price if you sign on for a two year contract. Over the life of the contract, you will pay a couple of thousand dollars.

Probably youll be bound in a 3 year contract with at&t.worth it if you don't mind the contract

Because you have to sign a 2year.contract with the carrier like AT&T or Verizon.
Without a phone contract it will cost you over $650 to just buy the phone if you are lucky!

OK all the other answers are basically wrong. First off there's no such thing as a "3" year contract. A phone gets outdated very fast. Second you are not paying a couple thousands. You pay $200 up front and withing a TWO year contract you are paying for it monthly. So if you are paying $80 per month. A portion of that will be for the cellphone. Let say $30 out of $80.So basically $30*24=$720… Simple as that.

Is it less or more? IPhone 5 costs $199.99 with 2-years contract with AT&T / Verizon / Sprint.

With a contract thats correct

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