As prices drop, when’s the best time to buy a new phone?

As the pace of advances in mobile technology accelerates, waves of new smartphones are appearing every few months. Here in the U.S., we’re addicted to handset subsidies and the two-year contracts that come with the lower priced phones. That’s why I told Kevin Purdy at Fast Company that the best way to take advantage of a new contract is to buy the best available phone at the time. The exception is to do what I do: Buy a phone at full price, such as a $ 399 Galaxy Nexus, and then find a low-cost month-to-month service plans that fits your usage and coverage needs.

Not everyone wants to pay full price for a phone. However, that doesn’t mean you can’t save on handsets from the carriers. I wanted to see how quickly phone prices are dropping, given the fast tech cycle and newer/better/shinier handsets arriving every month. To do that, I took a small sampling of phones available from each of the four major carriers, starting with Verizon Wireless, since it just dropped the price of the Droid Razr Maxx from $ 299.99 to $ 199.99 today. My research, albeit very limited compared to the vast number of handsets available, shows an average price drop of 41 percent after four months of a phone’s launch date.

Note: Some of these lower prices may be specials that the carrier didn’t announce. If I couldn’t find the official date of the new lower price, I used today’s date–which actually skews the “days at full price” higher. Again, this is just a very high-level estimate based on a few phones. Ideally, I’d love to see a phone price tracking service that follows all models and updates the prices daily.

Obviously, not all of these phones are top sellers, so some are experiencing lower prices because the carrier isn’t moving enough of a particular model. You’ll often see flagship phones — the ones that sell millions of units — at the same price for up to a year, and of course, Apple’s iPhone is only discounted by carriers once a newer model arrives. But if I had to guess before doing this exercise how long it takes for the price of the average phone to drop, I would have said four or five months, so I think this is reasonable.

As a general rule of thumb then: I’d strongly consider waiting a little longer if your contract is up and you’re looking to buy a phone that launched four or five months ago. Chances are — unless it’s a carrier’s flagship phone — hat handset might just drop in price by a sizable amount in the near future, or you can purchase an even better handset for the amount you were already willing to spend.

Of course, you can often find better deals immediately at non-carrier stores such as Amazon Wireless, Wirefly and the like. Yes, you’ll still have to commit to a contract, but you can save $ 50 or $ 100 right after a phone launches through a third-party service. Maybe that’s the best deal of all if you’re going to with a contract and want to save some money at the time of purchase.

Related research and analysis from GigaOM Pro:
Subscriber content. Sign up for a free trial.

  • CES 2012: a recap and analysis
  • 12 tech leaders’ resolutions for 2012
  • Carrier IQ and the continued erosion of operator trust