Well for example, I pay £15 per month on contract (and I got a free phone with the contract). For that I get 750 off peak minutes and 50 texts. Then, unlike contract only, it doesn't just let you make calls/texts outside those restrictions, you have to top up your phone for that. I usually top it up by 10 or 15 quid a month. It's just a way of keeping track of your spending, rather than getting a shock huge bill at the end of the month. When I was on contract only I would just call and text away and then find my bill would be £60 or £90 or something.