It depends on your usage patterns, but prepaid plans do tend to be quite a bit cheaper than postpaid plans with the same carrier. I don't remember the exact math (that I posted somewhere else on Hofo, maybe even in this thread), but it can be $20 cheaper per month to go with a prepaid plan.
$10x 24 months = $240 savings for going with contract-less prepaid over postpaid contract.
Typical phone subsidy on a 2 year contract: $150-$200
So, you're paying $240 over 2 years in order to get, at most, a $200 discount. That's $40-$90 worth of stupid.
It's cheaper to pay for the phone outright, and get a prepaid SIM.
Let's do a quick workup: I'm more familiar with T-Mobile's plans so I'm going to go with that.
Lets say, I do lots of night/weekend calling, very little TXT, and no data.
With a Pay Per Day prepaid phone, that'll cost me around $30/mo. ($1/day)
With a postpaid plan, that'll cost me $40/mo (the plans with unl. nights and weekends cost at least $39.99/mo).
That alone is a $10/mo difference. And that assumes I use the phone EVERY day. I don't. I use it on week days (22ish of them per month). So that really means I'm only going to pay $22/mo compared to $40/mo. $18/mo difference over a 24 month contract = $432 difference. And, again, the discount on your phone for taking a contract is only going to be about $200 ... so if I did a contract, I'd be paying an EXTRA $232 in order to get that subsidized phone.
Now, lets say after doing that for 6 months, I realize that I need to do more day calls, and that all of my calls go to AT&T cell phones. Further, I realize I need to start doing a lot of TXT. On a contract, I'm screwed. I'm with T-Mobile, I can't use their unlimited M2M for this, and the day calls aren't covered by the unlimited N/W. Sure, I could add unlimited TXT for $15, but that wont help with my daytime minutes, just with my new burden in TXT messages. But, I'm on a contract, so, I'm stuck. I have to add $15/mo for unlimited messaging, for $55/mo... and maybe increase the minutes to compensate for the extra calls to AT&T customers (or just pay for those minutes). So, $55/mo + voice minutes.
But, I'm not on a contract. So, I can just switch over to an AT&T Go Phone SIM. I can do their Pay Per day plan, $22/mo for voice, $20/mo for unlimited TXT. $42/mo. That's a $13/mo difference from being on a contract.
If I had been on an AT&T contract the whole time (instead of T-Mobile), $40/mo for the basic voice plan + $20/mo for unlimited messaging = $60/mo. vs $42/mo on the GoPhone SIM.
Add data, and the AT&T plan goes to $80/mo on contract vs $62/mo on GoPhone.
The prepaid plans more than make up for the phone subsidy over the course of your contract. If the contract wasn't high priced enough to make up for the cost difference, they wouldn't give you the discount. They're not in the business of giving away phones, they're in the business of making money, so of COURSE the deal they give you still has them come out ahead. No brainer there.
And, the other thing the prepaid plan gives you: agility. You can switch carriers at will, according to YOUR needs and calling patterns, without regard to what your current carrier wants or offers.