This information reflects the current contract terms Verizon offers to everyone.

iPhone is $899 + tax. Verizon pays Apple what you pay for the iPhone. You sign a contract for 36 months that states you'll pay Verizon a monthly installment without interest.

As for the "free" phone, it really can be free. Based on their own internal metrics is what makes you eligible. Accounts the system has flagged for fear of losing (retention), good standing (no missed payments), long time customers (loyalty), new customers, or when there is an abundance of stock and a new model is set to release. The catch is that you're on the hook for the price of the phone if you upgrade early or want to cancel your line. The average rep is not letting you upgrade because the system says no. A manager can override but if they do, you lose the credit. Your next bill will include the price of the phone. They're still making money off you in the long term whether or not the phone is free. It's calculated business.