A hardware subsidy or hardware surcharge is a surcharge that buyers pay to the mobile communications provider in a so-called bundle offer for the provision of a mobile device.
Hardware subsidization often leads to mobile customers being attracted to a smartphone or tablet by a particularly low additional payment for the device, but remaining in the subsidizing contract for longer after the minimum contract term or the underlying amortization period for the mobile device, i.e., paying too much.
The counterpart to the bundle is a SIM-only rate that does not include subsidized hardware.