Is SIM Only Value For Money ?

Value For Money

One of the main reasons to opt for a SIM only contract compared to a with handset contract (alongside greater flexibility) is to get a better deal on your monthly price plan. But just how much do you save by going SIM only?

The main reason why SIM only contracts tend to cost less than handset deals is because the mobile phone network doesn’t need to pay for a handset upfront.

It’s worth bearing in mind that networks frequently spend around £300 per customer on these new phones, and as they give them away up front this has two unfortunate side effects for them – firstly it typically takes a pay monthly customer 10-14 months to become profitable for them (meaning that most new customers they acquire in a year make their year ends profits look worse) and secondly tens of thousands of £300’s are tied up for long periods of time when they could be spent on something more profitable. As a result networks have a huge incentive to make their SIM contracts appealing so they can grow their market share without making their short term profits worse and so they can acquire new customers much more cheaply.

But just how much does this benefit you as a potential SIM only customer? The exact savings obviously vary significantly by network, by price plan and depending on whether you draw a comparison with a top of the range (and very expensive) included phone or a more basic one. Still, whatever comparison point you make it’s clear that there are significant savings to be made. We’ve looked at some typical, random examples from each network below. These are intended to reflect typical users on mid range contracts (defined as 500-600 minutes a month) and are not necessarily the best savings available.

Typical savings on O2

On O2 a typical 600 minute, unlimited text contract will cost £42 a month with a phone included on an 18 month contract. A 600 minute, unlimited text contract on SIM only is available for only £18.50 a month, less than half the price. It’s worth noting that there is slightly more data (for internet use) included with the 18 month contract but for customers using mostly talk and text the savings are a whopping 56%. Over 18 months this saving would be £423.

Typical savings on Vodafone

On Vodafone a typical 600 minute contract with 500mb on internet access and unlimited texts costs £31 on an 18 month contract. The same contract on SIM only is available for £20.50, a saving of £10.50 a month or 34% which is £189 over the life of the contract.

Typical savings on Orange

On Orange a typical 600 minute contract with unlimited texts and an included phone costs £36. A similar SIM only contract is available for just £15.60 a month (admittedly with 0.5gb of data rather than 1gb). A huge saving of 57% or £367 over 18 months.

Typical savings on T-Mobile

On T-Mobile the cheapest 18 month deal with 600 minutes costs £26 a month. A very similar deal with 5,000 texts instead of unlimited texts on SIM only costs just £15.50 a month. A saving of 41%. Over 18 months this saving would be £189.

Typical savings on Three

On Three a typical 24 month contract including a mobile phone (Three on longer offer 18 month contracts) with 500 minutes, 250mb of data and unlimited texts costs around £33. A similar SIM only contract with 600 minutes, 3000 texts and 1gb data (so offering more value) is available for as little as £12 a months. This represents a saving of 58% or £456 over the life of the contract.
Note prices change frequently and are correct at the time of writing. Comparisons are used to show relative differences between sim only and 18 month contracts. For the latest and most accurate prices check our deals pages.

Summary

  • SIM only deals offer good value for money because the networks don’t need to offer an included mobile phone with the contact
  • The comparison above of mid range contracts between networks shows that typical savings can be between around 40-60% on the monthly price of the contract, although in some cases less data is included
  • Over the lifetime of a contract these savings can be huge, they can be as high as £400+ over a typical contract period
  • Note prices change frequently and are correct at the time of writing. Comparisons are used to show relative differences between sim only and 18 month contracts. For the latest and most accurate prices check our deals pages.