When working in a cellphone store, we used to make more money on the shitty Nokia 8830 phones because they cost us 70 bucks to buy, sell em for free with a $250 spiff. Thats more money than selling a phone for 100 bucks where usually the phone price is $300 - $250 spiff + $50 profit.
Don't forget, when signing up for a contract they also charge you for line activation ($35) so they recoup their price rather quickly. About 5 years ago the standard contract was 1 year. Now 2 year minimum.
Verizon does a "contract-less" deal where you get the SAME plan without a contract. But you have to buy the phone full price... Think about it. That deal is 100x better for verizon. All the profit, none of the cost. And it gets even better!!!!!!! Thats right, verizon phones are USELESS ANYWHERE ELSE. Basically use V phones for V, or throw them out. So DUH its just as good as a contract.
I've yet to meet 1 person who realizes this.
The only "deal" is at 22 months of the 24 month contract, the company will allow you to renew the contract without any activation costs for a 24 month extension starting at the 22 month period (or when u called) and they apply the full "discount". This is perhaps the only place where you get a deal. You may say "but ur in a contract" in the united states there are no real capabilities to take a phone and switch carriers, only in europe does this capability exist (hence the GSM movement).