Edited for more accurate depreciation estimates.

No, it's the absolutely correct way to think about buying things. I didn't spend $1,000 to get a great phone to use this month, then throw it away next month. In business, you buy equipment, you typically account for it's cost over it's useful life, i.e. amortizing and depreciation. In your personal life, it's no different, you need the right framework to correctly evaluate these decisions.

And secondly, I didn't pay $400 extra over an iPhone 8. I'll own this phone at least two years. Historically an iPhone is worth roughly 30-50% (edit) of purchase price in two years. So my two years cost of owning an iPhone X is going to be (roughly) $300-500, and an iPhone 8 roughly $200-325, only a little more than a $200 average difference. A cheap Android phone only costs $200 but might only be worth $50 in two years, so it's only about $450 cheaper than my iPhone X.

Note that I'm ignoring service costs, because they should be the same no matter what phone I choose.

While this is the economically accurate way to view your actual costs, it can be used in a bad way to think is if you don't quantify your economic benefits. If there aren't any economic benefits, admit you are paying for the badge/prestige. And ask yourself if that's worth it.

In the case of the iPhone X, it's the fastest phone with the best screen, and best camera. Am I going to get $10 a month or so of benefits from them? I think so. Would it be worth $40 a month more? Probably not.

Why is that a terrible way to think about prices? Most people earn money at a predictable rate per month, so it’s perfectly reasonable to talk about these phone payment plans in the same terms. Obviously this isn’t true for things like credit card or mortgage payments, where interest is likely a significant factor, but AFAIK these cell phone payment plans are interest free.

It's an intellectually dishonest way to de-emphasise how much it costs in total by showing you the smaller monthly amount. You are basically using a marketing trick on yourself to justify the money spent.

Also, it’s not a marketing trick. Time value of money isn’t just some silly irrational psychological problem that marketers exploit. It’s a perfectly rational and useful phenomenon. The entire cost of an iPhone right now “feels like” a lot more than the cost split up into small monthly payments, because it truly is a lot more, by any reasonable theory of value.

I use the count-it-as-a-rental for several items, not often seen as such, like cars and phones. Yet I still own an S3mini, so not exactly a trick to spend much ;)

Edit: oh and I just bought a 20 y.o. car. My way of seeing it is useful in this case because I add the (very high) assurance rate, repairs and gas to get a realistic price. I predicted a reasonable car life and compared it with the numbers for a brand new car.

Intellectually it's actually the most honest way to consider it, because phones don't evaporate in a month. They retain value over years. So what is your real life time cost, and how does it relate to other options, and how does it relate to benefits from the purchase?

But the commenter actually is paying the smaller monthly amount, which probably is easier to afford than paying the entire price upfront. It should sound like a bunch of smaller payments instead of one large payment, because it truly is that.

Yeah it sounds just like how car salesmen try to talk you into buying a car you cannot afford.

It is, but it's also the most accurate way to view your actual costs. You understand it can be both, correct?

In the case of your car, what benefits are there to the more expensive model? My iPhone X, those benefits are easy to describe, better screen, better camera, faster, better form factor. Amortizing to compare the relative cost between it an iPhone 8 and seeing that it's roughly $10 a month allows me to make an informed decision about whether those benefits are worth the cost.

In the case of your car purchase, if the car salesman says it's only $200 a month more to get the "better" car, are it's benefits worth that much to you? Is the more expensive car safer, more comfortable, and are those benefits worth $200 a month? How much do you drive a month? Do you commute in rush hour traffic, or drive on the freeway? etc. etc.

It also hides the opportunity cost. $10/month doesn't sound like much, but $400 could buy something else nice.

But the opportunity cost is also $10 a month for however many months the plan runs. It would be appropriate to think of other monthly payments with the same opportunity cost (like a Netflix subscription), but it would be inappropriate to talk about things that cost $400 up front without also recognizing that you wouldn’t get those things until the end of the payment period.

There is no lost opportunity cost. Apple or the service providers are proving zero interest purchase plans. My iPhone X costs around $42 a month for two years, then I own a phone that is likely still worth about $500.

Whether you see the value or not, there is a robust secondary market whose history shows that there is strong demand for used devices and that their entire value doesn't evaporate in a few years.

And if I'm wrong about 50% depreciation being typical over 2 years, I'm not wrong by much. There is not a huge difference between 70% depreciation and 50% in your monthly cost of ownership. Undamaged 64GB iPhone 6s are selling for between $230 and $310 on eBay, so that's 60-70% depreciation. On average the 6s cost about $20 per month.

The 6S Plus was $750 for the most basic model at launch and now ebays for about $200 which squares with losing about half the value per year which is pretty normal.

Consider also the fact that the battery life will be substantially decreased from new and that most people wont be able to replace it themselves.

Something that is overprice is actually more likely to decline because 2 years from now its just a comparatively slow device that no longer serves as a status symbol.

It is only true because there is a second hand market that trust this is the correct price. Seeing how those devices need to move technically with their time (more powerful hardware), I fail to see the attraction of a device that would be well passed its prime, specially with a battery that isn't replaceable.

It’s terrible because any difference between carrier prices is a large multiple of what the sticker/brochure says. Most plans here (New Zealand) are over 2 years, so any difference in price is 24x greater at the end of the contract. And no one here is paid per month, that’s seen as completely antiquated and they are paid per week or per fortnight.

Really? Nobody is paid per month? Coming from the UK that is unexpected. Are jobs wages advertised per week? What are the real advantages? Surely it's a bit harder to pay for larger purchases as it requires more controlled saving and spending?

I’m sure someone is paid per month but I’ve never come across it. The advantage is fairly obvious - you get to have your money. How much interest are you missing out on? Having your employer in debt to you for up to a month per pay is fairly primitive.

I live in NZ and I would have said that virtually every salaried worker is paid monthly.

Have spent years on salary and so have most people I know, paid fortnightly. Seems like we need some real data.

I think it's a different way to think about prices, but I think the terribleness of it is subjective (assuming one understands the pricing model).