There are three ways to end up with a new phone in your pocket: a pay-monthly contract that bundles the handset in, buying the phone outright and pairing it with a SIM-only plan, or a hybrid where a retailer splits the device and the airtime into two agreements. Retailers make each look as cheap as possible, and the trick they all use is the same — put the smallest number in the biggest font.
The only number that matters
To compare like with like, work out the total cost over the term and divide it by the number of months. We call that the effective monthly cost, and it is what every deal on this site is sorted by unless you choose otherwise.
Take two deals for the same phone. Deal A is £25 a month with £300 upfront over 24 months. Deal B is £36 a month with nothing upfront over 24 months. Deal A looks cheaper — it is £11 a month less. But over the term A costs £900 and B costs £864. B is the better deal, by £36. That is a small gap here, but on a flagship it is routinely £100 or more either way, and it is invisible if you only look at the monthly figure.
Contract or buy outright? Check, don't assume
A contract is, underneath, a loan for the phone plus an airtime plan. The long-standing rule of thumb was that buying the handset outright and adding a cheap SIM-only plan beats a contract over two years, because the airtime inside a contract is priced above the network's own SIM-only rates.
That rule no longer holds reliably. When we run the comparison across the phones we track — same handset, same storage, a SIM plan with at least the same data, over the same term — the contract currently comes out cheaper on most of them. Retailers are subsidising handsets heavily to win contract customers, and that subsidy can outweigh the higher airtime price. On some phones outright still wins; on others the contract is cheaper by hundreds of pounds.
So the only safe answer is to do the sum for the specific phone. Every phone page on this site does it for you in a Contract or buy outright? panel, and the true cost calculator lets you add annual price rises and cashback. Buying outright does keep one advantage whatever the numbers: there is no early-termination charge, so you can switch to a better SIM deal the day one appears.
Where a contract still makes sense
- You cannot or would rather not find several hundred pounds today.
- The retailer is heavily subsidising the handset to hit a sales target — it happens, especially just after a new model launches and the previous one needs shifting.
- The contract bundles something you would pay for anyway (a streaming subscription, a tablet) and you have priced that in honestly.
The hybrid: device plan plus airtime
Some networks, O2 most visibly, split the deal into a device plan (often 36 months) and an airtime plan (often 24 months). The advantage is that once the airtime term ends you can drop to a cheaper tariff while continuing to pay off the handset. The catch is that the two terms are different lengths, so the true total is not simply the monthly figure times 24. When we see this structure in a retailer's data we add both parts up separately, and the deal card tells you the two terms explicitly.
Three things to check before you commit
- Mid-contract price rises. Most contracts go up every spring. The increase is now shown in pounds and pence before you sign — read it.
- What the data allowance actually is. "Unlimited" plans sometimes have a fair-use policy or slow you down after a threshold; check the small print if you are a heavy user.
- Coverage where you actually are. National percentages hide local gaps. Check the network's own coverage map for your home, work and commute.
Ready to compare? Start with the phone you want, or if your current handset is fine, go straight to SIM-only plans.