Ed can upgrade to the new iPhone and wonders if it's worth it to extend his contract or just buy it unsubsidized. Leo says that buying an iPhone outright can cost up to $1000. That's why most users buy subsidized, which is essentially paying for the phone over time with a two year contract. All the carriers have special plans now so he can get a new phone every year. But in the long run, he's actually spending more. If he isn't eligible for an upgrade, then he's going to pay the full price anyway.