How Much Is Your Cell Phone Really Costing You?

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Every two years, your cell phone is costing you $3,244. That’s $1,622 a year!

Your cell phone – it’s essential right? You need it to call people, to text, to search the web for data, to book appointments, and you may even use it to figure out where in the heck you are when you’re lost out there on the open road.

In just the past few years, the cell phone has become one of the most useful and necessary items that we carry with us each and every day. But, while it may be needed to excel in our everyday lives, how much money should we really be shelling out to have one? And do you even know how much you’re already paying for that cell phone of yours?

Just a public service announcement here…Your cell phone…it’s costing you a lot, and you might just want to stop reading now and plead ignorance.

But, if you keep reading and actually learn why it’s costing you so much, you can take action and bring that cost down. Moreover, we’ll teach you how to do it in this article. I mean, how would you like to save hundreds of dollars every year on your cell phone? Read on. We’ll show you how.


The Cell Phone Purchase

This is the biggie. Most people know about the big price tag of a cell phone, but it’s often masked because they opt for the payment plan instead of just buying a new phone outright (to be discussed in more detail later). Think about your last cell phone purchase. What did you actually pay for it? Do you know?

If it was a brand new iPhone, it probably cost you $800 or more.

Think about that. How much do you earn per hour? Now take 30% off from that number for taxes. How many hours of work does it take you to buy one cell phone?

  • Let’s say you earn $20 an hour. 
  • After tax, that’s $14 an hour.
  • $800/$14 an hour is 57 hours!

It would take you a solid week and a half of working full-time to buy a cell phone. Yikes.


iPhone Prices Right Now

iPhone Prices

You think $800 is ridiculous? Nope, it’s absolutely possible. Here’s what cell phones cost these days:

  • iPhone SE: $449 (this is the cheapest new phone you can get)
  • iPhone XR: $649
  • iPhone 11: $749
  • iPhone 11 Pro (64GB): $999
  • iPhone 11 Pro Max (64GB): $1,099 (up to $1,449 for 512GB)

*Pricing above is for 128 GB, Verizon phones, per Apple’s website June 2020


Sales Tax

Based on the cell phone costs we just reviewed, $800 actually looks to be a fairly accurate average. Let’s continue to roll with that.

According to USA Today, the average sales tax rate in the United States is approximately 6.0%. On a phone that costs $800, that’s an additional $48 that you may not have even considered dishing out.

But, it’s real and it’s coming out of your pocket every time you buy a new cell phone!


Activation Fee

It takes time for a cell provider to switch you over from one phone to another, so whether you like it or not, they typically charge for it.

Below are the activation fees by provider:

  • Verizon: $40 (currently $20 if you purchase your phone online)
  • T-Mobile: $0
  • Sprint: $30
  • AT&T: $40

The average activation fee: approximately $30.


The Payment Plan

Most providers offer a payment plan for cell phone purchases. And, shockingly enough, most also don’t charge any type of interest on those payments. So technically, there’s no additional cost for you to do this. But there must be something in it for the cell phone provider, right? I mean, a large company doesn’t just loan out money for nothing!

What’s in it for them?

The monthly service fee. That’s where they’re really making their money. And, as long as you owe money on your phone, you’re likely not going to cancel your plan or switch providers because you likely don’t have the hundreds of dollars in your account that you still owe on that phone!

Therefore, you just keep paying the monthly plan rate until your phone is finally paid for…

So, what is the average service plan rate per month? I’m so glad you asked!… 😉


The Monthly Plan Rate

How much do these cell phone providers earn each and every month? Based on the websites of the top four providers, the monthly rates are as follows:

  • Verizon: $70/mo.
  • T-Mobile: $60/mo.
  • Sprint: $60/mo.
  • AT&T: $65/mo.

*Pricing above is for unlimited text, talk, and data for a single user; rates as of June 2020


Taxes and Fees

According to, taxes on cell service is much higher than a typical sales tax rate. In fact, when reviewing all 50 states in the U.S., taxes and fees make up 21% of the average person’s cell phone bill each month.

When you do the math, this means that if your monthly plan rate is $60, your final bill will actually be $76!

That’s an extra $16 in charges you probably never considered!



Your phone costs $800… Ummmm, what if you dropped it and the screen broke? Or worse yet, it wouldn’t turn on again?

Just the thought of that makes you think, insurance. Because you know what? The last thing you want to do is have to buy another $800 phone!

But what is that insurance actually costing you?

I’m currently a Verizon Wireless customer. Below are the different insurance plans they offer:

  • Extended warranty – $5 a month – this covers you beyond the standard 1-year manufactures warranty on your phone
  • Tech Coach – $9 a month – to get you through all of your techie issues
  • Wireless phone protection – $6.85/mo. 
    • unlimited cracked screen repairs ($29 per claim)
    • next day device replacement for loss, theft, and damage
  • Total Equipment Coverage – $11/mo. 
    • Wireless phone protection plus battery replacement
  • Total Mobile protection – $15/mo. 
    • Total Equipment coverage plus tech coach support
  • Verizon Protect – $17/mo. 
    • Total Mobile protection plus wi-fi security, monitor ID theft and malicious content

I’d say almost everyone gets the “Wireless phone protection” plan that costs $6.85/mo. It’s not super expensive and it is pretty solid coverage if anything terrible happens to your phone.

So, let’s tack on another $6.85/mo. for what your cell phone is actually costing you!




Did you notice that the insurance plans above actually don’t cover anything? If you drop your phone and the screen cracks (which is pretty easy to do with most iPhones), you still have to cough up $29 every time.

If you don’t get the insurance, this can cost you $150-$200 to get repaired.

Let’s say on average that people get the insurance, but they still drop their phone once a year. That’s $29 a year in repair costs.



The new apple phone today comes with:

  • Earpods with lightening connector
  • USB with lightening connector
  • USB power adapter

No wireless earbuds, no case, no screen protector. Chances are, you’re going to buy all of these.

  • Airpods: $160
  • iPhone case with screen protector: $40

And quite honestly, many people buy even more stuff for their phones like a holder for their car, a pop-socket, multiple cases with different color schemes, bluetooth speakers… The list could probably go on and on, but in all fairness to you frugal folks out there, I won’t even count these semi-lavish accessories.


App Purchases and Overspend Due to Ease of Purchase

You might think these costs are a bit of a reach as well, but I can’t in good conscience ignore them. The spend DOES happen here.

First of all, the app purchases. Some apps are free, but they require upgrades for full-service use. Others cost money up-front that you willingly pay if it consistently improves your day-to-day life (or at least, keeps it from being extra-sucky). The long and short of it is though, that smart phones aren’t really all that great unless you’ve got it loaded with apps, and quite a few apps cost money. Therefore, it’s yet another way that your cell phone is costing you money.

Secondly, when you put a high-tech computer in the palm of your hand and you can buy anything you can think of in less than a minute, extra expenses are going to happen in your life.

Just like the additional accessories, I’m not going to try to quantify this and include it in the tally, but the extra spend is real. So please, try to be cautious and realize that you may be spending $20, $40, maybe even $100 or more a month because of your new cell phone.


The Final Verdict – How Much Is Your Cell Phone Costing You?

How Much is your Cell Phone Costing You?

Okay…so we had a lot of dollars floating around there. The phone obviously costs a lot, but what do all the dents and dings cost when they’re tallied up?

In an average 2-years stretch, your cell phone is going to cost you…

  • New cell phone: $800
  • Sales tax: $48
  • Activation fee: $30
  • Monthly Plan costs: $1,560
  • Additional taxes and fees: $384
  • Insurance: $164
  • Repairs: $58
  • Accessories: $200
  • App Purchases/Ease of Purchasing: Undeterminable

Every two years, your cell phone is costing you $3,244. That’s $1,622 a year! Yikes!

With a $20 an hour job (minus the 30% you’ll pay in taxes), you’ll have to work 116 hours to cover the cost of your cell phone each year. That’s three solid weeks of work just to pay for that little computer in your hand.

The cost is simply outrageous. Luckily though, there’s something you can do about it.


How to Save Big on Your Cell Phone Costs

How to Save Big on Cell Phone Costs?

Yes, cell phones are expensive. But there must be a way to save on some of these costs, right?

Thankfully, there are.

Spend Less With a Refurbished Phone

Some people always need to have the latest tech gadgets, so they trade in their phone every time a new one comes out. Either that, or their phone has a slight glitch, so they send it back and get a new one in its place.

If you’re looking to save money, you can capitalize on these trade-ins. SellCell is one of the best places to do that. Instead of shelling out $749 for an iPhone 11, you can hop on to their site and find the company that’s selling a refurbished phone at the cheapest rates!

Based on our recent search, you could save $70 just by doing a simple “iPhone 11” search through SellCell! Check out their refurbished iPhone 11. Refurbished iPhone 11

Or, if you want to save even more money, why not get just a slightly older model with the refurbished iPhone XR? With this simple move, you could bring the cost down to $519 – an overall savings of $230 from that brand new $749 rate! Refurbished iPhone XR

Make Money With Your Old Phone

Like I said earlier in this post, I’m a customer of Verizon Wireless. I own the iPhone 6s.

Yes, this phone is old. You know how I know? Verizon will only give me $23 if I trade it in… It’s hardly worth the effort.

But, you know what I could do instead? Through SellCell I could find the absolute best price for selling my iPhone. And it turns out that I could get a heck of a lot more money this way! Instead of a measly $23, they found me a company that would pay $71! That’s nearly $50 more!

Trade In iPhone 6S with

So, already, I’ve saved $230 on my cell phone purchase and earned $50 more with the sale of my cell phone. That’s an overall savings of $280!

Other Ways to Save Money on Your Sell Phone Costs

Is it possible for us to save any more money? I think so! Let’s check out the other areas of expense:

  • Activation fee
  • The monthly plan rate
  • Taxes and fees
  • Insurance
  • Repairs
  • Accessories

Believe it or not, it is possible to negotiate a lower activation fee when buying a new cell phone. Some providers will cancel the fee if you ask. Others will pretty quickly cut it in half.

The monthly plan rate is tricky and are often pretty static. But, if you work for a large company or are a veteran, you may be able to get a discount on your monthly bill (with just a little bit of effort, you should be able to knock 5% off the standard rate).

Taxes and fees – These will naturally come down if you can get your monthly plan rates reduced, so put for that!

How about insurance? Should you do without the insurance plan?

Personally, I never purchase the insurance plan. But, I’m careful with my phone and rarely drop it. I figure the function of the phone is already covered under the manufacturer’s warranty for the first year, so if make it another year or two after that, it’s a win. And, I can save myself $82 a year that way.

If, however, you’re careless and you drop your phone often, it might be a better deal for you to pay for the insurance. (Either that or buy one of those mondo cases that will protect your phone from a multi-ton smash (like you know, riding over it with your car)).

And of course, that move will save you in repair costs too.

Finally, how about those accessories? Can you save there?

Sure you can! Just don’t buy them! 😉

Seriously though, those Earpods with the cord, they’ll serve you just fine. You don’t need the wireless ones. How often are you really walking around without your phone in your hand anyway? I’m going to go with…never.


How Much Could You Save?

How Much Could You Save?

Let’s add it all up. If you sold your phone through SellCell, bought your phone through SellCell, and then were cautious on your other purchases, what would your total bill be (instead of $3,244 every two years)?

  • New cell phone: $800  $519 (buy a refurbished iPhone XR)
  • Sales tax: $48  $31 (spend less on a phone, pay less in sales tax!)
  • Activation fee: $30  $0 (just ask!)  
  • Monthly Plan costs: $1,560  $1,482 (ask how you can get a discount of 5% or more) 
  • Additional taxes and fees: $384  $365 (this price comes down if you can reduce your monthly plan costs!) 
  • Insurance: $164 (do without and don’t drop your phone, it works for me!)  
  • Repairs: $58 $29 (be careful!)
  • Accessories: $200  $40 (get a case, skip the airpods)

By reducing your spend with the slight concessions above, you still get an awesome phone and most of the benefits, but at a reduced rate. So, instead of shelling out $3,244 every two years, your total cost now comes to $2,466! A savings of $778!!

Whoa! That’s a lot of money for just a couple of sacrifices. Think of what you could do with that wad of cash!

How about you? Are you ready to save on your cell phone costs?

Start here by selling and buying your old tech at great deals with