Should You Upgrade Your Mobile Every Year? Here’s The Cost Analysis

Smartphone launch cycles are getting shorter. Now, new models are being launched within a span of a few months, unlike previously, when manufacturers would launch one in a year, with the exception of Apple, who still follow the old practice of launching smartphones once a year. 

Several online stores, such as Flipkart, have put in place a system that allow people to frequently upgrade their smartphones. Flipkart has a Smart Upgrade plan, which essentially allows a user to purchase a Samsung Galaxy series or a Realme phone at 70 per cent of the price and either pay the remaining 30 per cent, or, return the phone, a year later.

Ranjith Boyanapalli, head, fintech and payments group at Flipkart, said in a statement, “While we pioneered the Smart Upgrade and Product Exchange last year and received an encouraging response, we are expanding the offerings this year to make it more widely accessible to our customer base, including those who are new to credit.” 

Tuhin Mallick, a private company employee and part-time tattoo artist, says: “I used the scheme to buy a Realme phone last year, and this year, I will upgrade to the latest model whenever it is launched. This has helped me to lower the purchase price of the mobile and will also help me get the latest in tech. So I will always have the latest mobile.”

Catching this trend of upgrading smartphones frequently, most youngsters are inclined to change their smartphones frequently due to various needs, such as better gaming experience, camera, or others. But all of this comes at a price.

Rachit Chawla, founder and CEO, Finway, a Delhi-based financial services company, says that investing on new smartphones every year can be an extravagance for many, since the prices of the electronic devices rise significantly each year, while the features more or less remain the same. 

“However, buyers should be careful about their expenses even while availing these financial benefits (buy now pay later, equated monthly instalments, consumer loans), since these can enhance pressure on their future expenses. Also, investing that amount otherwise spent on buying a smartphone in saving plans, such as liquid or short-term debt mutual funds, fixed deposits, others, can be a more sensible financing strategy,” Chawla adds.

The Money Calculations

Let’s assume, both ‘A’ and ‘B’ both buy smartphones worth Rs. 20,000 in 2022. ‘A’ upgrades to the latest series every year, while ‘B’ upgrades once every three years. 

The exchange value is kept fixed at 40 per cent of the mobile’s cost, and the cost of the smartphone of the same series is increasing by 10 per cent each year. 

From the calculations, as seen in the table, ‘A’ spends about Rs 85,000 (after adjusting for exchange value) for acquiring six smartphones over a period of six years, while ‘B’ spends about Rs 41,000 (after adjusting for exchange value) acquiring two smartphones over a period of six years. The differential in cost for both the persons is Rs 44,000.

So while ‘A’ gets to have all of the latest tech and other goodies in a smartphone every year, he has also spent more than double of what ‘B’ has spent. 

This, in essence, is the extra cost that one will have to pay if one keeps on upgrading smartphones every year.  

While some people might need to upgrade to better devices each year for work or other matters, but for most average consumers, upgrading smartphones every year might not make sense, unless it is for pure aesthetic or recreational purposes.

Most smartphone manufacturers these days are supporting their devices with longer software updates. 

Samsung has committed for four generations and five years’ worth of software updates and security updates for their S, Z, and A smartphone and smartwatches.

TM Roh, president and head of MX Business, Samsung, said in a statement, “We are taking our commitment to innovation one step further with up to four generations of One UI upgrades to ensure our users enjoy the best possible mobile experience for longer.”

Realme has committed for three major Android OS updates and four years of security updates. Oneplus, Xiaomi, and others have also committed to such longer duration device software updates.