Explain Like I'm Five | Don't Panic!

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The original was posted on /r/explainlikeimfive by /u/RoamingUniverse on 2023-06-27 18:03:39+00:00.

Hi guys,

Just a thought that came to my mind, but with some of the contracts out there, it seems like they're bound to make a loss. In this example, I'll go with a Google Pixel 7. A 128GB of that would cost £599. With the airtime with it, let's go with a guess of £10 a month, thus £240 for a 2 year contract. So in total, that's £839.

Here's the kicker, the contract is priced at £25 for 24 months. Even accounting for let's say a 13.9% hike each February that would add up to £679. So... I can't quite wrap my head around where they are making the money!