T-Mobile tweaks pricing again: New “zero down” plan is quite the deal when combined with Jump

It’s getting harder to keep track of how much an iPhone 5 costs on T-Mobile(s tmus) these days. But this time it’s good news: once again, the carrier is offering an eye-popping deal on Apple’s(s AAPL) latest phone as well as every single smartphone, tablet and hotspot in its portfolio. On Friday, T-Mobile said customers can switch to an iPhone 5 with no down payment on the device, just a $27 per month charge on top of their monthly wireless plan bill. The monthly payments for other devices vary, but otherwise the zero-down benefit remains the same.
But while “zero down” sounds really good, be aware you’ll be paying the same overall cost as before: $0 up front plus $27 for 24 months is essentially the same as $146 up front and $21 per month, $648 versus $650.┬áThe real value, however, comes if you combine this promotion with T-Mo’s new Jump upgrade program. You wind up considerably less for any high-end device, especially the iPhone 5.
We confirmed the details with T-Mobile, and here’s how combining the programs would work: You get an iPhone 5 for no down payment and pay $27 a month in device installments and $10 a month in Jump payments. At the end of six months you’ve paid only $222 in device costs, but are eligible for a upgrade. If you wait 12 months, you would pay $444 toward the iPhone. Considering what device costs would be on the Jump plan (For an iPhone 5: $332 over six months, $518 over 12 months), those are significant savings. Granted you don’t get keep your device when you upgrade, but T-Mobile is forgiving hundreds of dollars in remaining payments.
T-Mobile has been struggling to find the right price point for its device installment plans, in particular its iconic Apple smartphone. Since mid-May, T-Mobile had been selling the iPhone 5 for $146 down and $21 per month payments for two years. And previous to that, T-Mobile was selling the iPhone 5 for $99 down plus $20 monthly payments as part of its new plan to differentiate itself from other U.S. carriers.
The zero-down deal introduced Friday, like the earlier deal in March, has an unclear timeline. If you’re interested in this iPhone 5 deal, it’s advertised as a “summer” and “back to school” program, so don’t wait too long. The promotion begins Saturday. So keep in mind that if you sign up for Jump with the promotion today, you probably won’t get the same deal when you upgrade to the next phone. By then T-Mobile’s device financing will likely go back to upfront down payments.
As Apple continues to try to squeeze growth from the iPhone, deals like this from carriers who have a lot of basic phone users can be instrumental in getting users to upgrade mid-way through the device’s lifecycle. A new iPhone is due out this fall, making this promotion ideal for customers who want to use Jump to upgrade between the two iPhones at Christmas. Apple gets the best of both worlds: more iPhone 5 sales without sacrificing potential sales of the refreshed iPhone in six months.
As for T-Mobile, there’s little doubt it’s losing money on this promotion if customers combine it with Jump. In some cases, customers are only paying a third of the devices overall costs before T-Mo accepts them for trade-ins. It’s probably a calculated risk on T-Mo’s part, designed to lure in more customers right before the big school rush begins.
This post was updated at 9:36am with additional details on the offer after reaching T-Mobile representatives.