1-year EXTEND contract VS 2-years RENEW contract

Since my mobile plan contract has recently already reached one year, I did some thinking and developed some thoughts regarding recontracting our M1/Starhub/Singtel

As we all know we buy a phone with contract is much cheaper than buying a phone without line, we usually change our handphone every 2 years. Telcos have also improvised on this, allowing us to get the promotional prices for our desired phones if our contracts have only been 1 year, by just adding $100. Some pple like this idea because they can change phones every year, some pple don't mind waiting for 2 years before changing their handset.

I have discovered it makes a lot of economic sense to extend your contract every after 1 year.

Let me use a very popular phone for example, the Apple iPhone 16GB. Handphone shops or "Ah Beng Shops" are selling a brand new one for $1198. You may be able to find cheaper, say maybe $1100. This price is without contract.

If you were to sign up a Singtel contract, maybe iOne Plus ($25.68 per month), you can get the iPhone at $748. Compared to buying without line at $1100, you save $350 by signing up a 2 year plan.

Now, if I currently have a Singtel iOne Plus contract which is already 1 year old, I can buy the iPhone at $748 + $100 = $848. This means that I can save $250 compared to buying without line at $1100.

The main crux is capitalising on this $100 which is the additional cost in order to renew the contract. This $100 is very cheap because I still save $250. If next year I extend again, given the same circumstances, I save another $250. This means that in a 2 year timeframe, I actually saved a total of $500 beause I renewed every after 1 year. Compared to waiting for 2 years for my contract to end and then renew it, I would have saved only $350 for a new phone. Thus in 2 years, I gained $150 more.

Some may think that they do not need a new HP every year. In fact many pple do. There's always other alternatives. Many HP dealers and shops offer cash to you for signing up new lines, something like $250 for a line similar to iOne Plus. Walk to Lucky Plaza HP shops to check out how much they offer for a brand new particular model before walking to Paragon M1 shop or Wisma Singtel shop, recontract your plan and get that model. Sell it back to the shop and you can gain at least $250.

You can even sign up the line at the Ah-beng shop itself, but they may quote you lower if you ask like that. Personally I also dont like to disclose my personal details to Ah bengs so I rather sign up with telcos, get the phone then negotiate with different Ah beng to see which Ah beng can quote me better price, or see which Ah lian prettier then I sell to her.

Althernatively, you can sell if off on internet buy/sell websites like eBay.com or hardwarezone.com, but subject to marketability, time and convenience.

Until the telcos realise that paying just $100 extra on top of promotional phone prices for extending contract is too cheap, it makes great economic sense for us consumers to extend contract after 1 year instead of renewing contract after 2 years. Hopefully they won't increase this $100.

P.S. I do know that after telcos offer only 21 months contract nowadays intead of 24 mths (2 years), but to calcuate in detail, we still earn by extending contract.