Why are unlocked smartphones so expensive?

When signing a new contract plan, users can walk away with a brand new phone for only a couple hundred dollars. With the right options, rebates, and carrier, users may end up with a free, or nearly free version of their favorite smartphone. But it’s the stipulations that provide a good deal. Factor in contract fees and a lack of flexibility, and there’s very little room for wiggling.

Enter the super expensive “unlocked” phone. Phone service providers saw that their customers needed the option to come and go as they pleased, and they decided to let them. By charging them exorbitant amount. Purchasing a new, unlocked iPhone 5 will cost a hefty $649.99 – $600 if buying from a private party. And that doesn’t even include any service to go with it, phone or Internet. In contrast, signing a two-year contract will bring the same phone to $199.99.

What Gives?

A computer can easily be purchased for the price of an unlocked smartphone. It may not be the best or biggest, but it’s still a computer with all its working functions, software, available updates, and whatever else that makes electronics so expensive. Tablets – the fancy ones – even cost less than an unlocked smartphone. Therefore extra fees can’t be chalked up to hardware, parts, or even display.

So why are such large price tags being slapped on our phones? Many argue that users actually pay more over time with their contract deals, as there is a monthly fee built into service agreements. But unless that charge is named “sales tax” or “4G service,” most users would argue against said claim. Others state that the cell phone companies are subsidizing phone company expenses. True or not, this doesn’t account for why phones cost so much more than tablets and computers. If simple cell phones are given away, it can’t be the calling feature racking up the fees, right?

Is it really just about convenience? Even after one’s contract has been fulfilled, the phone belongs to Verizon, or AT&T, or whatever other service provider has stolen the device’s soul. Users aren’t locked into that phone indefinitely, per say, but without some possibly illegal adjustments, the devices are.

While the public may not understand these serious price hikes, it doesn’t look as though they’re going to reduce anytime soon. Fans of the iPhone simply have to decide whether it’s worth paying a few extra dollars, or sitting heavily under someone’s thumb.