How to use the iPhone 5 to get a Free Nexus 4 on contract

If you’re planning to pick up the Nexus 4 and don’t mind getting locked into a 2-year contract, there is a way you can pick up the latest Nexus handset for FREE. You might even get a little bit of spending money for your troubles too. Carriers offer a subsidized phone in exchange for a two-year commitment. They do not do this out of the kindness of their hearts. They do this because it’s a smart business decision. Perhaps it’s time more consumers make equally smart business decisions regarding mobile devices and service contracts. For some that might mean opting for a pre-paid service and seeing a substantial savings over a subsidized phone and two-year contract, but if you want to play ball with the major carriers this strategy might be the ticket for the free Google lunch you’ve been waiting for.

Making the smart business decision when selecting your subsidized phone means getting the most money for your commitment. For most carriers that still means iPhone. The AT&T 16GB iPhone 5 has a subsidized price of $199. It sells on eBay for about $700 to $900. If we put the value of the iPhone at $800 then you can look at it as AT&T is paying you $600 for your two-year commitment. The 16GB Nexus 4 on T-Mobile will also sell for the subsidized price $199. You’ll soon be able to buy it from the Google Play Store for $349. Accepting this subsidized phone means you’re accepting a $150 payoff. Does that sound like a smart business decision?

Hit the break to see how to best take advantage of the phone subsidy model and grab a free Nexus 4 and possibly have some cash left over for some accessories.

You’ll need to identify what subsidized phone offers the biggest return. The iPhone 5 has been out for a month and a half and is still hard to get in some markets. Its scarcity may explain the reason for its high resell value. The Samsung Galaxy Note II might be your next best bet if your on AT&T, and if you’re on T-Mobile, it’s definitely your best bet. Next you’ll need to determine what phone you actually want to end up with. The Nexus 4’s bargain price of $349 makes it an ideal candidate. You can follow the steps in any order. Some of you might want to start with dessert and get your hands on the Android 4.2 wielding Nexus first, while others might want to see a little of that green flow back into your pocket before shelling out more cash.

  • Step 1 – Buy the phone with the biggest payback. Our Example will be the iPhone 5 on contract for $199.
  • Step 2 – Sell that phone (eBay, Craigslist, your friend at the office…).
  • Step 3 – Let’s say you sell the iPhone to a friend for $600. Subtract your initial investment and you’re looking at a $400 profit which you can then invest in a brand new, shiny Nexus Quatro.

As we said earlier, you will typically pay more over two years with a subsidized phone rather than going with a pre-paid offering by one of the MVNOs (Mobile Virtual Network Operators). The subsidized phone model, however, works well for those with several lines in a family plan. Moving several lines from a family plan to individual pre-paid lines does not usually bring a huge savings. Some may also choose to stick with their carrier if they value the better customer service experience or want access to an LTE network.

You should also keep in mind that buying a subsidized phone on AT&T and Verizon may force you to select a new plan if you’re grandfathered in to an unlimited data plan. By now most people have learned to live with the tiered data structure but it’s still a concern for some.

When it comes to mobile, everyone is in a different situation and what makes sense for one person might not make sense for someone else. Maximizing your subsidy is a concept that can save you a considerable amount of money if you plan to stick with a carrier for at least the next two years. We focused on getting the Nexus 4 on AT&T or T-Mobile which is the best bang for the buck, but this concept is applicable to other phones as well as Verizon and Sprint customers. Let us know if you go this route and how you make out.

About the Author: Rudy Rivapalacio

Rudy is a Southern California guy who has used his tech savvy skills in a law enforcement and corporate security career. He often jokes about having a "Windows 3.1" tattoo and has the Bill Gates-like rule regarding no Apple products in the home. His two daughters (one at Cal, one in High School) have so far found a way to abide by that rule. When not glued to Android news or on Xbox live, Rudy is probably off traveling abroad. His West Hollywood apartment is littered with a few too many bikes, cameras and Android relics, but he's found a way to hide most, or some, of his toys from his wife. Rudy is a big Chargers fan, and consequently, buys beer in bulk.

  • Slyck

    Wtf is thw point again? You are still under contract and instead of an iphone5 you end up with a nexus 4? Sounds really stupid.

    • GraveUypo

      instead of buying the nexus for $199 on contract, you get the iphone, sell it for $400 profit, which is enough to buy a nexus4 on the outside. so in the end you end up with a nexus4 on contract, but for “free” instead of $199.

      not sure it’s worth the trouble tho.

  • crazymikesapps

    No offense but there is no new information here, and I mean the big savings is to sell an iphone on Ebay or Craigslist, this seems kind of obvious.

    • RobertNazarian

      What do you mean no information? It might be obvious to you, but many people do like to buy on contract. Yes it’s strange, but it’s true. You have a choice. Buy the Nexus 4 for $299 or this method and end up with the same Nexus 4 with another $100 to $200 to spare. No one is saying EVERYONE needs to do this. It is just one option to throw out there. It’s obviously not the right choice for you and that’s okay, but it might be for someone else.

      • crazymikesapps

        Sure, I could buy a car, sel it and spend the money on an Nexus 4 or buy and sell whatever. One little tidbit of information left out is if you buy a phone on subsidy we will use the example of the iPhone say on AT&T Wireless. Just because the phone is no longer in your possession does not mean the 2 year contract goes away. Right, so using this method should come with further directions to be sure that the Nexus 4 will be offered for the provider you pulling this scheme on.

        Bottom line, the article may have had a better angle with, buy gold, sell it a month later and take the money you earned and buy a Nexus 4.

        Sorry, still don’t see the value and yes I buy all my iPhones and Android phones on contract for the most part.

        • RobertNazarian

          It was never implied that the two year contract goes away. The title of the article says “on contract”

  • Sam

    if you do this what is the situation with your sim card? does the nexus 4 come with a new one that is compatible with your att contract? i know that the iphone 5 has a nano sim, not a micro sim like the nexus 4 so you couldn’t just swap the sim cards. Would you have to resort to an adapter and sell the phone without a sim card?

  • HA3AP

    You are not gaining anything, in fact you are loosing out.

    Lets have two scenarios #1. Is the one you propose then #2. Is the one I propose.


    Buy iPhone 5 16GB – $200

    Sell iPhone 5 16GB – $700 (In Reality 700$ would be top dollar base on current market price)
    Profit – $500

    Nexus 4 – $350

    Best Case Scenario total saved is 150$ BUT you are still stuck under a 3 year contract. (Yes its 3 yrs in Canadaland)

    Say a year from now you want to cancel/get new phone etc. – $400 cancellation fee – $250 out of pocket and a lot of hassle.


    Buy Nexus 4 – $350 out of Play Store, no contracts or anything in your way switch carriers upgrade phones anytime… PROFIT!

    • RobertNazarian

      Option 1 as you described is more than a savings of $150. You have a Nexus 4 as well that you didn’t pay a dime for. You picked up $500. You still have the phone.

      Option 2 you are out $350

      So with Option 1 you have a phone and and extra $150 in your pocket. No cost. Option 2 you spend $350. That’s a $500 swing.

      Now it might not make sense to you with the three year contract, but for some that are on two year deals or for whatever reason plan on staying on their current plan for the next couple of years, it’s a major savings.

      • GraveUypo

        i would encourage people to do this. if anything, you can buy the phones they are selling off-contract with a nice little discount.

  • DLF

    Does this actually work? To sell a subsidized, on-contract iPhone on eBay would require the carrier to cooperate in moving it to a different user/nbr.