How to work out the true cost of a phone contract

1. The upfront payment

Not a deposit and not separate from the price — it is part of what the contract costs. A £99 upfront payment on a 24-month contract is £4.13 a month that does not appear in the monthly figure.

This is the most common single reason two contracts advertised at similar monthly prices differ by a lot in total, and it is the easiest to leave out of a comparison because it is quoted in a different place.

2. Mid-contract price increases

Most UK contracts allow the price to rise during the term. The mechanism has changed over time: inflation-linked increases with a fixed margin added were standard for years, and flat pounds-per-year increases stated in cash terms have become more common more recently. The regulatory position on how these must be disclosed has also moved.

Because of that, this page will not tell you what your increase is. Any rule stated here would be wrong for a good share of readers, and confidently wrong is worse than absent. What it will tell you is that the increase is in your contract, that it compounds, and that leaving it out understates the total.

Find the clause, then put it into the contract cost checker as the month it starts and the new monthly figure. On a 24-month contract an increase from month 13 typically adds tens of pounds; over 36 months, considerably more.

3. Out-of-bundle charges

Calls to numbers that are not included, extra data, premium-rate numbers, and calls made abroad. These are usually modest each month and consistent, which is what makes them add up quietly.

Look at three recent bills, take a typical figure, and treat it as part of the monthly cost, because it is. £4 a month is £96 over two years.

4. Cashback that has to be claimed

There are two different things sold under this word, and only one of them is money.

Automatic cashback arrives without you doing anything. Count it in full.

Redemption cashbackrequires you to claim, in a specified month, often with a copy of that month’s bill, sometimes several times across a term, with the claim rejected if it is early or late. A substantial share of it is never successfully claimed.

Treating redemption cashback as certain makes the contract with the most conditions look like the cheapest one. If you are confident you will diarise every claim, count it. If you are honest that you might not, discount it or leave it out.

5. What happens after the term

The end of a minimum term is not the end of the contract; it is the point at which you can leave without a penalty. If you do nothing, the payments generally continue.

On a bundled contract that means continuing to pay for a handset you have finished paying for. Networks must notify you when the term is ending — the notification is easy to miss, and a great many people are well past a term they believe they are still inside.

Getting to one number

Upfront payment, plus the monthly charge for every month of the term with any increase applied from the month it starts, plus typical out-of-bundle spending across the term, minus cashback you are genuinely confident of.

Divide that by the term and you have an effective monthly cost, which is the figure two contracts can honestly be compared on. It is usually noticeably higher than the advertised one, and the gap is different for every contract — which is exactly why comparing advertised prices ranks them wrongly.

One thing this does not settle

If one option includes a handset and the other does not, no amount of contract arithmetic makes them comparable, because one of them contains several hundred pounds of phone.

That is a different calculation over a different period, and SIM-only versus a phone contract covers it.