They don't always make that on the phones. For example I signed up for early edge and got a $500 phone and make a $21 payment each month. Once I paid off $250 of that phone I could trade it in and the payments for that specific phone stop and payments on a new phone begin.

Now also take into account that they discounted my line access charge from $40 to $25 a month saving me $180 in 12 months (also the length of time it would take me to pay off half my phone.) Do the math and I've only spent $70 in 12 months on that new phone and $140 total. Which was less than the 2 year contract price of $199.