It’s still largely unknown how potentially rising tariffs will affect the cost of future smartphones. Will companies like Apple pass on expected rising production costs to consumers, or will they absorb the costs themselves? Will President Donald J. Trump blink and there will be no new tariffs?

One thing that remains certain is that the total cost of a smartphone, such as an iPhone 16e or Galaxy S25, or something else, doesn’t just include the price of the device. You are also paying a monthly service fee, taxes, and other fees.

So what’s the true cost of a smartphone in the U.S.? Let’s take a look.

The device payment (or opportunity cost)

For many Americans, the most visible monthly cost is the installment plan offered by carriers or retailers. Flagship phones can easily exceed $1,000, translating to significant monthly payments over 24 or 36 months.

• Example: A phone priced at $1,200 financed over 24 months results in a monthly payment of $50 (excluding interest or additional fees).

However, even if you purchased your phone outright, there’s an opportunity cost to consider. That chunk of money could have been invested or used for other purposes. While not a direct monthly expense, it’s a factor in the overall financial picture. Furthermore, the depreciation of the device over time represents a gradual loss of value.

The essential service plan

A smartphone without a service plan is basically useless. Major carriers like Verizon, AT&T, and T-Mobile, along with smaller Mobile Virtual Network Operators (MVNOs), provide these plans, significantly impacting monthly expenses.

Individual Plans: Basic individual plans with limited data typically cost $30 to $50 per month. Unlimited data plans usually cost between $60 and $90 or more, depending on the carrier, features (such as hotspot data or international calling), and applicable taxes and fees.

Family Plans: While they offer better value per line, they still add up to a considerable monthly cost for households. For instance, a family of four on unlimited plans could spend anywhere from $150 to $250 or more monthly.

It’s essential to closely examine the specifics of your service plan, including data limits, policies on data throttling, and any extra costs for exceeding those limits.

The hidden costs: taxes and fees

The advertised price of your service plan rarely reflects the final monthly bill. Federal, state, and local taxes and carrier-specific fees (such as administrative or regulatory recovery fees) can add a significant percentage to your monthly cost, varying widely depending on your location.

• Example: A $60 advertised plan could easily become $70 or more with the addition of taxes and fees.

The necessity of insurance or a protection plan

Smartphones are fragile and expensive to repair. Many users opt for insurance or protection plans offered by carriers, manufacturers, or third-party providers to cover accidental damage, loss, or theft. These plans typically come with a monthly premium.

Example: Protection plans can range from $8 to $15 or more monthly, adding another layer to your recurring expenses.

The inevitable accessories

While not strictly mandatory for basic functionality, most smartphone users purchase accessories that contribute to the overall cost of ownership.

Phone cases and screen protectors: These are often considered essential for protecting the device and can cost anywhere from $10 to $50 or more upfront. While not a recurring monthly cost, their necessity should be acknowledged.

Chargers and cables: Losing or needing extra chargers for different locations is common. These can add a few dollars to your monthly spending over time.

Headphones or earbuds: Whether wired or wireless, these enhance the smartphone experience and represent an additional cost.

The subscription ecosystem

Smartphones are gateways to many subscription services that enhance their functionality and entertainment value. Many users subscribe to at least a few of these services, adding to the monthly bill.

Streaming services: Netflix, Hulu, Disney+, Spotify, Apple Music, etc., can collectively cost $30-$60 or more per month.

Cloud storage: iCloud, Google One, and Dropbox subscriptions for backing up photos and files are often necessary as storage needs grow.

Gaming subscriptions: Apple Arcade or Google Play Pass add a monthly fee for access to a library of games.

Other apps: Productivity apps, fitness trackers, and news outlets may also require monthly subscriptions.

Calculating the true monthly cost

To get a clearer picture of your actual monthly cost, consider the following:

• Divide the total cost of your phone (if purchased outright) by its expected lifespan in months. While subjective, a reasonable lifespan is often considered to be two or three years (24-36 months). If you’re on a payment plan, that represents your direct device cost.

• Add the cost of your monthly service plan, including all taxes and fees. Carefully review your bill to identify these surcharges.

• Factor in the monthly cost of any insurance or protection plans you have.

• Estimate a monthly average for accessory purchases over the lifespan of your phone. This amount might be small, but it contributes.

• List all your monthly subscriptions that you primarily use on your smartphone and sum their costs.

Real-life example

I have an iPhone 16 Pro Max that’s covered through zero-interest financing through AT&T. Here’s a look at my current bill:

• Phone cost (financed): $39.89/month
• Unlimited data plan: $75.99/month (best plan)
• Taxes and fees: $17.55/month
• Insurance (AppleCare): $13.99/month
• Total monthly price: $147.42

In addition, I subscribe to Apple One’s Premier plan, which I share with my daughter and costs $37.95 per month. This provides me access to Apple Music, iCloud (2TB), Apple TV+, Apple Arcade, Apple Fitness+, and Apple News+. One could certainly argue that I don’t need any of this. And yet, I can say with certainty that I wouldn’t purchase any of it if I didn’t have a phone.

Finally, there’s my Netflix subscription, which costs me $24.99.

Therefore, the true monthly cost of my iPhone is $210.36 (wow), which doesn’t include accessory purchases, which I won’t include here.

Ways to lower the monthly cost of your phone

There are a few ways you can immediately reduce the monthly cost of a phone. For example, I could skip the discretionary spending (Apple One + Netflix) of approximately $63/month. Eliminating the monthly insurance fee is also possible ($13.99/month), as is switching to a cheaper data plan.

Costs could be further reduced by purchasing a refurbished or used phone or finding a new phone on sale. I could buy a less expensive iPhone, which could lower the cost by up to $20 per month. This is probaby the path I’d take if I didn’t write about Apple everyday and felt the need to have the best iPhone available.

The bottom line

While smartphones offer immense convenience and connectivity, understanding their true monthly cost is crucial for effective budgeting. By looking beyond the initial purchase price and factoring in service plans, taxes, fees, insurance, accessories, and the ever-growing landscape of subscription services, consumers can gain a more accurate picture of the ongoing financial commitment involved in owning these ubiquitous devices in the United States. Making informed choices about plans, insurance, and subscriptions can help manage these costs and ensure your smartphone remains a valuable tool without breaking the bank.

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