The average UK smartphone costs £600-£1,000. On a 24-month contract at £40-£60/month, you've paid for the phone and the SIM plan combined. But most people never switch to a cheaper SIM-only deal when the contract ends — and pay the same rate for another 12-24 months after the phone is fully covered.
How Phone Contract Pricing Works
A typical phone contract bundles the cost of the handset with a monthly SIM plan. On a 24-month contract at £45/month, you're paying roughly £20/month for the phone hardware and £25/month for calls, texts, and data. At month 25, the phone is fully paid off — but your bill stays at £45/month. The excess profit goes to the network.
- Most contracts: 24-month term covering handset + SIM costs
- After 24 months: network keeps charging the bundled rate unless you switch
- Typical handset cost hidden in contract: £15-£30/month
- After contract ends: switch to SIM-only immediately
- Some networks reduce cost automatically — most don't
When should I switch to SIM-only?
As soon as your contract ends. Contact your network or switch to a new one. A comparable SIM-only deal for the same data allowance typically costs £6-£15/month — vs £40-£55/month on contract.
Best SIM-Only Deals UK 2026
SIM-only prices vary significantly. The cheapest deals for moderate data (10-25GB) are available from virtual networks (MVNOs) using the same infrastructure as the main networks. Lebara, ID Mobile, SMARTY, Lyca Mobile, and Sky Mobile all offer competitive deals that use EE, Three, O2, or Vodafone networks.
- SMARTY (Three network): 25GB for ~£6-8/month
- ID Mobile (Three): good value with data rollover
- Sky Mobile (O2): competitive data options
- Lebara (Vodafone): excellent international calling rates
- iD, Smarty, Giffgaff: all significantly cheaper than main networks for same coverage
Keeping Your Number When You Switch
You can keep your existing phone number when switching to a new SIM or provider. Get a PAC (Porting Authorisation Code) from your current network by texting "PAC" to 65075 — they must provide it within 1 minute. Give it to your new provider; your number transfers automatically within one working day.
- Text PAC to 65075 — get code within 1 minute
- Valid for 30 days
- Give PAC to new provider
- Number transfers within 1 working day
- No gap in service for most transfers
When Contracts Are Worth It
Phone contracts can make sense if you want a new flagship phone without the upfront cost, you have poor credit (contracts can help build history), or the contracted price is genuinely comparable to SIM-only + financing. Always compare the total contract cost vs buying the phone outright + SIM-only over the same period.
- Compare: total contract cost vs (phone cost + 24 × SIM-only cost)
- Contracts win when phone price is heavily subsidised
- Always price-check the handset separately on Smartpay or Backmarket
- Refurbished phones + SIM-only often saves £200-£400 vs new contract
- Trade-in deals can make upgrade economics more favourable
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