The price of free

Since my current mobile phone has been busted for almost a year now, I recently purchased a new phone from Amazon. I got the Sony Ericsson T610 with cell service from T-Mobile. Amazon is currently offering the phone for $154.99, which is $45 off the regular price. Two rebates are available when you purchase this phone, one from Amazon for $130 and one from T-Mobile for $100 (if you “activate a T-Mobile plan of $39.99 or higher”). T-Mobile charges $35 to activate your account.

When you do the math, Amazon, Sony Ericsson, and T-Mobile end up paying you $40 to buy a $200 phone. If you’re like me, when a large company wants to give you something for nothing or wants to pay you to purchase a product, you start thinking that someone somewhere is getting screwed.

Gillette recently sent me a $10 razor for free, presumably so they can sell me replacement blades at $2 apiece, a price I’m assuming includes a ridiculous profit margin. My credit card company is constantly bombarding me with offers to pay me to try their services, which they can afford to give away because we’re paying them 18% interest on our purchases and we’ll forget to cancel these “free” services to the tune of $11.95/mo. (which monthly service fee is subject to the 18% interest and is both brilliant on the part of the credit card companies and maddening to their “customers”). My bank gives me free checking, but they sell my personal information to companies that send me junk mail and overdrafts cost me $20…which is why it’s a good thing they also offer overdraft protection for a “low” monthly fee (this is what my dad would call “straddling the fence”).

And now this cell phone thing. With this deal, the buck ultimately stops with T-Mobile. They’re getting $40/mo out of you (with taxes and the extra service charges that all the phone companies throw in probably brings the bill up into the $50/mo range), $35 for activation (way too much…is this not a cost of doing business?), you’re locked into a contract for 1-2 years ($200 early cancellation fee), and they can then charge you $3-7/mo for each of the following services that should be part of any modern cell phone service: SMS messaging, Internet access, sending photos via SMS or email, and unlimited in-network calling.

However you slice it, let’s put it this way: they (and the other mobile communications companies) are making so much money selling their service that they (with the help of Amazon and Sony Ericsson) can give you a free $200 phone and $40 cash. I wonder what phone service would cost if I had more than a mere handful of companies to choose from?