Breaking down the iPhone 5s upgrade math

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Now that Apple has pulled back the curtain and shared the details on the new iPhones, it’s decision time. If you decide you want one, though, the next question is whether or not you’re locked in to the smartphone you have now and whether or not there is anything you can do about it.

To be fair, there is nothing groundbreaking about the new iPhones. If you already have an iPhone 5 or some other premier smartphone like a Samsung Galaxy S4 or a Nokia Lumia 928, there may not be much to compel you to run out and get an iPhone 5s or iPhone 5c.

Apple unveiled the latest line of iPhone models earlier this week.

The truth is that most of the cool stuff is actually a function of iOS 7 rather than the specific iPhone model, but some iPhone models will not be able to use all of the new features of iOS 7. From a business perspective, though, the fingerprint sensor on the iPhone 5s is intriguing, and might be a reason to make the switch.

If you already have a smartphone, and your contract isn’t up yet, and it’s not new enough for you to be enrolled in a program like T-Mobile Jump or Verizon Edge that allow you to upgrade more frequently, then what?

You have a few options.

1. Pay full price

The only reason you need to concern yourself at all with whether or not you’re “eligible” to upgrade is because you can’t take advantage of the subsidized pricing. If you’re willing to pay full price for the device, though, there is nothing stopping you.

You can offset the cost of buying a new iPhone by selling the smartphone you already have. Depending on what kind of device it is, you may be able to get $200, $300, or even $400 for it by listing it on Craigslist, eBay or some similar online classified service. With $400 cash for your old smartphone, a $650 iPhone 5s will only cost you $250 out of pocket, which is only $50 more than getting it on contract.

2. Pay early termination fee

If you don’t mind switching phone numbers, you can just cancel the contract on your existing smartphone and start fresh with a new iPhone on a subsidized two-year contract.

The amount of the early termination fee, and the fine print behind how it works will vary from one wireless provider to the next. I spoke with Verizon customer service, and they explained that their ETF is $350, and it goes down by $10 each month.

Using my own case as the example, my early termination fee with Verizon is currently at $80. I could sell my current iPhone for $300 or $400, pay the $80 ETF, and go get a new iPhone 5s for $200 with a new two-year agreement. In the end—at least in my case—I can actually pay the ETF, get a new line, and end up making money on the deal.

Your situation will vary depending on how much your early termination fee is and how much money you can get for your current smartphone.

If you don’t want to change numbers or lose money, you could just wait to upgrade.

3. Special trade-in deals

It’s possible your wireless provider may offer special deals and discounts. Verizon explained to me that the full cost of the iPhone 5s will be $550 without a contract (I've tried to corroborate that, but since it's not available for pre-order it's hard to find official pricing information aside from what Apple has posted on its site), and that they are offering me a $100 upgrade ineligibility discount. Basically, they won't let me upgrade early, so they're throwing me a $100 bone.

So, the cost of the iPhone 5s after the upgrade ineligibility discount is $450, and I can trade my current iPhone 4s to Verizon for $200, and I end up paying $250 out of pocket.Or, I could sell my iPhone 4s myself (see above), and get more money for it and spend even less out of pocket for the iPhone 5s.

The $250 is $50 more than the $200 price with a new contract, and it’s probably more money than I’d end up spending selling the iPhone 4s myself and paying the early termination fee. The advantage, though, is that I get to keep my existing number, and as a bonus my upgrade eligibility doesn’t reset, so I’d actually be eligible to upgrade again with a new contract in just a few months if I choose.

4. Patience

You could just wait.

If you got your smartphone in the last year, odds are fair that it’s good enough as is, and there is really no reason for you to jump through hoops to rush out and get an iPhone 5s.

If you got it more than a year ago, you’re contract will be up before you know it, and you can go get an iPhone 5s if you choose without having to go through all of this hassle.

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