Upgrading & Early Termination Fees

Here's an interesting story about a guy trying to negotiate upgrades for his family to the latest iPhone. All comments aside about the scam that constant upgrade "opportunities" offer, the story is an interesting mix of straight math and emotion. So basically, economics. Homo Economicus might have just skipped the upgrade altogether (or took his family back to flip phones).

The story in itself seems like more of a hook than the basis for a problem you'd actually spend the bulk of a class period on, but it opens up larger questions about early termination fees, upgrade costs, etc. Given deal X from company A that gives you free or cheaper phones with a new account, at what point is it "worth it" to leave your existing phone company and suck up the early termination fees?

There are lots of other interesting variables that could factor into the decision:

• How many phone lines you have
• Variations in cost between the actual monthly phone plans of the two companies
• How soon you'd be eligible for an upgrade with your current company
• How soon the other phone lines would be eligible for an upgrade
• What kind of quantifiable measure you put on being cooler than your friends and/or having the latest thing. Would it change your mind about waiting out your time until an upgrade if you knew that all your friends would have the new iPhone before that? How many friends would you care about? Can you quantify how much you care?