Why T-Mobile charges $100 more for the Nexus 5 – No, it’s not a con

nexus 5

Yesterday we got official word that T-Mobile US would be selling the Nexus 5 through its own channels from next week. Online stores will begin selling the device from November 14th, with retail stores and select partners offering it up for sale from the 20th. This was a few days after we received a tip off that stated retail stores would start selling it on November 20th.

One sticking point however, is the price. Early reactions from you – our readers and others – is to criticize T-Mobile for pricing it at $100 more than Google. With an initial down payment of $41.99, then 24 monthly payments of $17, T-Mobile’s price for the Nexus 5 comes to $449.99. Although there’s a huge convenience for those that don’t have the $349 to pay Google up front, it’s still a considerable markup. And there’s good reason for it, regardless of how consumers may feel.

Having reached out to T-Mobile, CNET got word that the carrier’s reason for the price is simple: That’s what Tmo pays LG for each unit. If LG charges T-Mobile $449, it makes little business sense for the network operator to offer a $100 discount to price match. Unless its plan is to lose a lot of money. It’s Google then offering a subsidy on the handset, and not T-Mobile trying to rip-off its customers for an extra $100.┬áMaybe Google has done a deal with LG to sell these cheaper, or paid LG $450 and just taken a hit in hope that it brings more customers through its Play Store and generates enough profit from content and ad sales to make up the $100 difference.

Of course this doesn’t change the fact that, as an end consumer, you’re still paying more to get it from T-Mobile. An extra $100 for a device that’s no different to the one on sale on the Play Store. There’s no T-Mobile bloatware, no carrier lock, no Wi-Fi calling. It’s the same carrier unlocked, 16GB model on sale for $349 from Google. T-Mobile pays $450, so you pay $450. It’s still frustrating, it’s still worse value for money. But it isn’t a swindle.

Of course, T-Mobile will argue it offers better value in the short term. You only have to cough up $42 initially, and pay the rest in installments. And I know that for some of you, financially, that’s the only option. I guess if there is a positive spin on this, it’s that $450 is still fairly cheap for a top handset. An iPhone – for instance – unlocked and off-contract costs $649.

Let us know in the comments if you already planning on getting it through your carrier, or if Google Play is your best option.

News Via: CNET

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