It's taken a while to happen but it now looks like it's often cheaper to buy a SIM Free Smartphone and a SIM Only deal than buying the same phone from a network on a contract.

If you can afford the upfront cost of the handset buying it outright makes most sense as you have the opportunity to move networks at will.

A Samsung Galaxy S2 is around £396 on Amazon SIM Free, or £16.50 a month over 24 months. It's not hard to find a SIM only deal with unlimited data, lots of texts and minutes (200-300) for £12 a month. Total cost would be £694 for 2 years. Comapred with £34-40 a month on a network contract (£816) at best without an upfront handset cost.

Although you may be right the example you gave was easy to beat, from e2save on Talk Mobile with unlimited data - £24 per month with £39.99 up front for 24 months gives a total of £616. http://www.e2save.com/mobile-phone/c...ork=talkmobile
I got my SE Arc from them on a 12 month contract of £20 a month and nothing for the phone so they can offer some good deals and the phones are usually unbranded . I would expect the price of the SGS2 to fall after may 3

Good spotting, Sadly too many simply pay attention to the headline monthly fee and don't work out the total cost over the period of the contract.

Agreed, especially if you can pick up the handset at a good price. Plus with quidco you can actually reduce you're costs a lot. I do this a lot now, it works out much cheaper plus you're not tied into 24 months with a sim onlyn .

Yup, this has been the case for a while.

However, with certain cashback deals (provided the retailer doesn't go under and you remember to submit the claims) then it can be cheaper to get the phone on contract.

You really need to do the maths to make sure you're getting the best deal over the long term.

For example, on a cashback deal that I just found, a Galaxy S II with 300 mins, 3000 texts and 500mb data on O2 works out at £21.33/mo with cashback, which is £511.92 all in. You are, however, tied in for two years and if the retailer goes under during that time then you wont get the cashback (so stay with the big ones).

For some people, the upfront cost of a smartphone will simply be too much.

If the difference isn't that much, paying nothing upfront, but more per month might simply be better for some people.

Agreed but since the launch of the iPhone upfront costs have been creeping into quite a lot of contract deals especially the lower cost ones where folks don't need 1000s of minutes.

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Yeh this is true as well, i've seen some amazing deals where you can get a pretty solid amount of allowance with a free phone where the contract costs less than it would to buy the phone out right. I guess it all depends on the phone you're going for and the network/s you want to go on.

It can vary, as jabbamk says, sometimes a 24 month contract comes along where total contract cost can be less than SIM free phone outright.

Or even with less fancy phones, just the deal can be hard to beat. A free Samsung Chat 335 might only be worth about £50 or so, but you can get 250 mins 5000 texts and 500MB data for £7.50/month on a 24 month contract with Tesco. If that is the kind of allowance you want, hard to find it for less than £7.50/month anywhere (even Tesco's own SIM-only deals don't offer that for £7.50/month).

There is, however, certainly some value to be had in not being tied to a 24 month contract - or at least an inappropriate allowance that doesn't become as appropriate as cirucumstances change (after all, 2 years is quite a long time).

The networks get such a big discount on handsets due to the quantities they buy, some two thirds of all UK smartphones are sold by the networks themselves, so they can offer deals that compare favourably to SIM-free. However, they are getting every more and more sneaky at adding additional charges, and making plenty of things non-inclusive, so much so that a 24 month £30 contract will seldom cost anyone £720 and probably cost a lot more over the 2 years.

It is easy to end up with bundles that are not used - and therefore a too high monthly charge - or run out of minutes and get ripped off by the awful run-on rates - 40p per minute is acceptable these days!

Outwith iPhone there appears to be some savings to be made if you buy a high spec mobile like a Samsung Galaxy S2 or Note SIM Free with a SIM only rolling contract rather than entering into a contract deal that lasts 24 months. It's astonishing that some networks still SIM lock phones on contracts. What is the point as you have to pay the full contracted price! Vodafone have not SIM locked any of my last 3 contract phones allowing me to use them in other countries without paying a fee within the contract period. Better if you can afford a SIM Free handset though as this allows total flexibility and some savings nowadays.

it depends really.

I stopped bothering with contracts a few years ago.

im now with giffgaff, and never pay more than £10 a month. Im sure you can get similar deals with other networks.

Im not bothered about having the latest smart phone. at least this way, I get to pick when to buy a new phone. If my phone lasts me more than 18 months, then I dont need to upgrade for the sake of it. I think Ive had my current hanset for almost 4 years.