So the no contract price of a 16gb is $599.99 and the contract price is $199.99. If you wanted to get it without the contract, wouldn't it be smarter to get the phone on contract and then do early termination of $325? You'll be saving at least $75.
Well, you have to pay activation, pay the first month's bill, and I believe they may even take the phone away if you haven't been with them for a few months because they subsidize it, so no.
Without contract:
iphone = $660 with tax
With contract:
iphone = $260 with tax
att activation = $36
first month's bill = $40 for voice + $15 for data = ~$60 with tax
ETF = 325
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= $681