The Trick Behind 1-Yen Smartphones: A Detailed Explanation of Why and How They Can Be Bought for 1 Yen

Recently, I've seen an increasing number of advertisements for "1-yen smartphones" at electronics retailers and mobile phone stores.

When you hear that you can get an iPhone or the latest Android device for just "1 yen," it's hard to believe, isn't it?

Many people probably wonder, "Can it really be that cheap?" or "Is there a catch?"

This article will clearly explain how 1-yen smartphones work, their mechanisms, and important points to note when signing a contract.

What is a 1-yen smartphone?

A "1-yen smartphone" refers to a sales campaign where a smartphone device is offered for 1 yen upfront or effectively 1 yen.
Since devices that normally cost tens of thousands of yen can be obtained very cheaply, many people are likely to be drawn to these offers when they see them in stores or online.

They primarily have the following characteristics:

• Sold under the condition of a new contract or switching from another carrier (MNP)
  
  

• Requires subscription to a specific plan
  
  

• Significant device price discount or point redemption making it "effectively 1 yen"

The mechanism behind purchasing for "1 yen upfront"

✅ What is 1 yen upfront?

This refers to a sales model where you pay only 1 yen for the smartphone device upfront. In other words, the initial cost is genuinely 1 yen.

✅ How can they sell it for 1 yen?

This was mainly achieved by combining the following discounts:

• Significant discount for MNP (number portability)

• Purchase with a communication contract

• Store-specific campaigns

• Sales incentives from manufacturers and carriers

✅ Past situation (before 2023)

• For sales bundled with a communication contract, a discount limit of 20,000 yen was allowed.

• There was no discount limit for device-only sales.

• As a result, high-performance smartphones could also be sold for 1 yen upfront.

❗ How did guideline revisions change things?

📅 December 2023 Revision

• Discount limits were clarified.

  • Smartphones under 40,000 yen: maximum 20,000 yen discount

  • Smartphones between 40,000 and 80,000 yen: up to 50% (e.g., max 40,000 yen discount for an 80,000 yen phone)

• Discount limits also apply to device-only sales.

• "1 yen upfront" for high-performance models became almost impossible.

📅 December 2024 Revision (Planned/Partially Enforced)

• For mmWave compatible, high-end models priced at 110,000 yen or more, the discount limit is relaxed to 55,000 yen.

• However, this is under the limited condition of "mmWave compatibility."

📌 What types of devices are currently eligible for 1 yen upfront?

• Originally inexpensive models (20,000-30,000 yen range)

• Older models

• Inventory clearance purposes

🔍 The mechanism behind purchasing for "effectively 1 yen"

✅ What is "effectively 1 yen"?

• A sales method where the actual cost to the customer becomes 1 yen if they use and return the device after a certain period.

• Instead of paying the full amount upfront, it combines installment payments with conditional returns.

✅ Specific mechanism

1. Contract for an expensive smartphone with installment payments (e.g., 120,000 yen)

2. Utilize a device purchase program (return plan) that states, "If the device is returned in month XX, the remaining balance is waived."

3. Discounts and cashbacks bring the effective cost close to 1 yen

🔄 Example:

• 1 yen monthly burden for 24 months + return in the 24th month → Total effective burden of 24 yen

❗ This has also changed due to stricter regulations.

📅 December 2024 Guideline Revision

• Calculation of "expected buyback price" upon return made stricter

• More clear and rational justification required to advertise "effectively 1 yen."

• As a result, sales advertised as "effectively 1 yen" are becoming more difficult.

💡Differences between 1 yen upfront and effectively 1 yen, and the impact of regulation

✅ Points to note

• Clearly distinguish between "upfront" and "effective."

• Thoroughly check return conditions, contract cancellation fees, and communication fees for total cost.

• There are always conditions or risks behind a "1 yen" offer.

When and where campaigns are held

These campaigns are primarily seen during new lifestyle periods (March to April), and around New Year's and fiscal year-end closing periods. Since they are often held when sales competition is fierce, most cases are for a limited short period.

Sales locations mainly include electronics retailers, mobile carrier shops, and special booths in shopping malls, but they can also be offered as online-only campaigns.

Eligible subscribers

1-yen smartphones are primarily targeted at users who switch from other carriers (MNP) or new subscribers. While there are cases where device changes are eligible, significant discounts are basically applied to "people who are signing a new line contract."
This is a measure by carriers to acquire new contracts, and new/MNP subscribers tend to be favored over existing users.

What does "effectively 1 yen" mean?

Some advertisements may explicitly state "1 yen upfront," while others use the phrase "effectively 1 yen."
"Effectively 1 yen" means that by paying for the device in installments, combined with discounts on monthly fees or cashbacks/point redemptions, the final amount the user pays becomes equivalent to 1 yen.
Therefore, since monthly payments are still incurred, it's important to be careful even if it says "1 yen."

Why can smartphones be offered for 1 yen? The mechanism of 1-yen smartphones

Smartphones can be sold this cheaply because mobile carriers pay incentives (sales promotion fees) to retailers.

Carriers operate on a business model that generates profit not from device sales, but from the monthly communication fees thereafter.

Therefore, even with some device discounts, they ultimately profit by securing long-term contracts.

So why can smartphones that originally cost tens to hundreds of thousands of yen be sold for "1 yen"?
The trick lies in the following mechanisms:

Carrier sales promotion support (incentives)

Mobile carriers (such as Docomo, au, SoftBank) pay subsidies to stores to acquire new customers and encourage transfers from other companies.
These incentives allow retailers to sell smartphones at heavily discounted prices.

Bundled sales with high-priced communication plans

"1-yen smartphones" are often sold as a bundle with communication plans that have higher monthly fees.
Carriers operate on a business model where they recover the device cost through long-term communication revenue.

2-year contracts and cancellation fees

Discount conditions may include a 2-year continuous contract or a cancellation fee for early termination. It's important to note that terminating early could result in a high cancellation fee.

How to get a 1-yen smartphone?

To actually get a 1-yen smartphone, you need to meet several conditions.
In most cases, joining a specified communication plan is mandatory, and it may also be a condition to temporarily subscribe to options such as warranty services or video streaming services.
Additionally, you may be required not to cancel the contract for a certain period or to continue installment payments for the device. In particular, contracts involving transfers from other carriers are often the most favored.

What were "0-yen smartphones"? Their history and the background of regulations

In the past, campaigns to get smartphones for "0 yen" were common in Japan.
Especially from the early to mid-2010s, it was not uncommon to get the latest iPhone or Android for completely free by performing an MNP (Mobile Number Portability).

Why could they be offered for 0 yen?

At the time, mobile carriers were heavily focused on acquiring customers from competitors and implemented the following measures:

• High cashback for MNP transfers
  
  

• Full device price discount, effectively free (or completely free)
  
  

• Tens of thousands of yen in rewards for family transfers
  
  

This led to a trend among users to "switch carriers every two years with MNP to get a new smartphone for 0 yen."

Ministry of Internal Affairs and Communications regulation banned "0-yen smartphones"

However, this sales method caused the following problems, so the Ministry of Internal Affairs and Communications stepped in to regulate it.

• Sense of unfairness where only some users excessively benefited (MNP favoritism)
  
  

• Lack of transparency in fees due to shifting costs to communication charges
  
  

• Market distortion due to effective "giveaways"
  
  

From 2016 onwards, the Ministry of Internal Affairs and Communications issued notices to each carrier prohibiting "excessive device discounts," and measures such as "0-yen devices" and "high cashbacks" were largely restricted.

Why are "1-yen smartphones" reappearing now?

While aggressive device discounting had subsided for a while after the regulations, "1-yen smartphones" and other extreme discounts have become noticeable again in recent years.

This is due to the following background:

• Increased competition due to Rakuten Mobile's new entry
  
  

• Promotion of migration from old plans to new plans
  
  

• Unique measures by sales channels (e.g., electronics retailers)
  
  

• "Effective discounts" and "point redemption" methods to circumvent legal regulations
  
  

Even though "0 yen" is regulated, significant device price reductions are currently happening again in the form of "1 yen" or "effectively XX yen."

3 points to note when purchasing

While "1-yen smartphones" certainly seem like a good deal, keep the following points in mind.

① Many contracts have conditions

• MNP (Mobile Number Portability) is mandatory
  
  

• Subscription to specific paid options is required
  
  

• In some cases, point redemption occurs after installment purchase
  
  

It's dangerous to jump at an advertisement just because it says "1 yen." Always check the contract terms.

② Monthly fees can be expensive

Even if the device price is low, the total cost can be higher if the monthly communication fees are expensive.
It is important to calmly calculate "how much will it cost in total?"

③ Device SIM lock and usage restrictions

Some 1-yen smartphones may have SIM locks or network usage restrictions applied if not used for a certain period.
Be especially careful if you plan to use it with other lines.

▶The Pitfalls of "1-Yen Smartphones": Points to Note and How to Choose Without Regret

Is it really a good deal? Before considering a 1-yen smartphone

A "1-yen smartphone" can be a very good deal if the conditions are right. However, it's important to carefully consider whether the plan is truly necessary for you, including the contract period and the risk of cancellation fees.

Compare it with purchasing a low-cost SIM or a used smartphone, and make your decision after looking at the total cost.

📊【Comparison】"Low-Cost SIM + Used Smartphone" vs. "1-Yen Smartphone" Total Payment (Estimated 2 Years)

📌 Comparison Points and Explanation

✅ Low-cost SIM + Used Smartphone

• While the initial investment (device cost) is higher, the monthly fee is very low, making it overwhelmingly more affordable over 2 years.

• Offers flexible plan choices, fewer restrictions, and generally no cancellation fees.

✅ 1-Yen Smartphone (Major Carrier)

• Even if the device price is 1 yen, the communication fees are set high, making it more expensive in the long run.

• Less contract flexibility due to options and cancellation conditions.

🔍 Supplement

• For those who use little data (3-5GB/month), low-cost SIMs offer overwhelmingly better value for money.

• "1-yen smartphones" are generally not a good deal unless you buy the device cheaply and immediately change the SIM (※in which case, there's a risk of contract violation or cancellation fees).

🧠 Conclusion: Which is better?