Verizon Wireless (VZ), the top U.S. carrier, doesn't like to engage in price wars, but the company will be offering more generous iPhone trade-in allowances for customers buying the new iPhone 6S and 6S Plus, Yahoo Finance has learned.
Customers will be able to apply the trade-ins, of up to $400, immediately toward the purchase of new Apple (AAPL) iPhones to reduce either the full cost or monthly installment plan payments. But Verizon is still requiring that customers buy a new phone, rather than offering some of the lower-cost leasing deals its rivals are pitching.
All of the carriers are seeking to entice a huge wave of Apple fans expected to upgrade from earlier models when the new iPhones are available for pre-order at 3 a.m. EST on Sept. 12. And this year, Apple introduced its own installment and early upgrade plans to make it easier for customers to buy iPhones directly from the maker and skip buying from the carriers altogether. So the carriers are getting more creative competing not just with each other but also with Apple.
Smaller carriers Sprint (S) and T-Mobile (TMUS) have both announced this week that their customers can lease new iPhones instead of buying. At the end of the two-year lease term, the customer must turn in the iPhone and cannot keep it or resell it. The leases also allow for phone upgrades before the end of the two years, but doing so extends the term further.
Leasing allows Sprint and T-Mobile to offer lower monthly payments than Verizon is set to charge. For an entry-level iPhone 6S 16GB model, Sprint will charge $22 per month on a lease and T-Mobile will charge $20. Verizon and AT&T (T) will be selling the phones outright for $27 a month.
So Verizon is taking a different tack to reduce customers' monthly payments via its new, higher trade-in offers. Verizon will pay consumers $100 for an iPhone 4 or 4S, $200 for an iPhone 5 or 5C, $300 for an iPhone 5S, $350 for an iPhone 6, and $400 for an iPhone 6 Plus. Customers with 32GB, 64GB or 128GB iPhones won't receive any more money than those trading in an entry-level 16GB model, however. The phones must be in working condition and customers must go into a Verizon store to get imemdiate credit for a trade-in.
The prices are higher than Verizon currently offers for trade-ins. For example, trading in a 16GB iPhone 4S under the current program garners only $15 in the current program. Likewise, the new plan offers more than Apple itself pays for used iPhones. Apple is currently offering $325 for a 16GB iPhone 6 and just $165 for a 5S.
Without a trade-in, Verizon will charge $650 upfront to buy a new iPhone 6S, or $27 per month for 24 months. But if a customer applied a $300 trade-in credit, the price would drop to $350 or under $15 per month.
Competition among the four carriers had been easing a bit over the summer, with some imposing new fees or phasing out promotional deals. But the imminent arrival of new iPhones has reignited the price wars, albeit in device pricing instead of the cost of service plans.