Verizon's iPhone Herd Mentality: Pay, pay more, and pay again.

We’re still trying to wrap our heads around this “deal” spotted in the Verizon iPhone FAQ by Gadgetell (underlining ours):

I just purchased a new smartphone during the holiday season, but if I knew that iPhone 4 was going to be available soon I would have waited. What are my options now?

Current Verizon customers who purchased and activated new smartphones, feature phones or certified pre-owned phones between 11/26/2010, and 01/10/2011, are eligible to receive up to a $200 Visa debit card when they purchase an iPhone 4 at full retail price by 02/28/2011 and return their existing phone. Note: This offer is only available on consumer accounts with five lines or less, who are purchasing iPhone 4 through Verizon Wireless retail stores, telesales, or through verizonwireless.com.

So, if you have recently bought a new Android or Blackberry phone during the holiday season, you can turn it in and essentially get your money back.  But Verizon isn’t giving you $200 — it is paying only as much as you spent on the phone to be returned, up to $200.

Verizon says that earns you the right to go and get in line to pay full retail price for a new iPhone in February.  No discounts or subsidies for you!  The 16GB iPhone runs $649.99 and the 32GB iPhone costs $749.99.

We’re basking in the savings.  Gosh, thanks Verizon!

Not only are customers giving up Verizon’s “new handset subsidy” — often worth hundreds of dollars, they also lose their New Every Two discount and other savings from promotions like Verizon’s Smartphones Talk Free $9.99 monthly discount for 24 months.

For those who simply must have the iPhone, Verizon will make you pay dearly for not waiting.

Having owned the iPod Touch (essentially the iPhone without the phone) and Motorola’s Droid X, I can testify the price penalty Verizon wants you to pay for the iPhone isn’t worth the asking price.  Move on, there is nothing to see here.  This is even more true considering the next generation of the iPhone will likely be introduced in just four months.  What will you do then, and how much do you think Verizon will extract from you all over again to get that phone?

There is no doubt Apple’s iPhone is a fine phone, but there are cheaper ways to get one, ranging from opening a new line on your Verizon account and passing your old phone down to a family member, to finding one on eBay, subsidized in part by selling your existing phone.