What does getting a free phone mean to a cellphone company?

I want to just shed a little insight to the mobile telecommunications. When people come in and want to buy a phone, or start a new line of service with [enter your cell phone company's name here] they all want the same thing. A free phone. They don't want to pay for anything. So what always happens is that they get their free phone and then walk out the door. They are fine for a little while, but after a year or so, they start to see the limitations of the free phone. They walk back in and ask if they can get a new phone. I say sure. I give them an average price of $199.99 for the phone. They then ask, but the paper said that its only $19.99, why don't I get that price. So then I tell them why they don't.

When you came in and got service with [insert phone company's name here] you signed an agreement with us to be our customer for the next 24 months. As a result if this agreement we have you a great price on the phone. That price was $0.00. We gave you $199.99 off the phone when you signed up. Now you are here 12 months in, and realized that maybe this phone is too limited. And you want a $249.99 phone for $19.99. But you forgot to figure out that, when we gained you as a customer we lost $200.00. You signed up for a $39.99 price plan, so using simple math, we the cell phone company broke even 5 months after you signed up. So now [enter your phone company name here] is up $280.00, and now you want us to reach into our pockets after a year and give all of that back to you less $50.00? Would you do that? I sure as hell wouldn't. You've been with us for 12 months, and if we did that, we only made $50.00? I'm sorry but no.

So now you know how the cell phone business works. Next time you walk into your store and demand a free phone, think about the repurcissions. That company isn't going to give you a thing! They can't afford it. A little hint. They aren't lieing when they tell you that the full retai price of the phone is the exact cost of what the cell company pays to get that device on the shelves.