The lowest price on an iPhone is at WalMart where it's about $2 less than at AT&T and Apple. You can't buy an iPhone at these places without a 2 year AT&T contract. The least expensive monthly plan is $70/month. It costs $175 to terminate the contract making the phone $375. The cost on Ebay and other websites is far higher. AT&T is selling refurbished iPhones for $99 with contract.
People have had success turning the iPhone into a pay as you go but it's complicated. You can google it to see how.