In countries where we have the joy of buying phones without contracts, the majority of the customer, doesn't go above the 300€ line, when paying the full price out of their pockets.
The last few years I've not been offered a contract, but the ability to finance the phone. An inversion of the prior contract model, it's more what you expect. There are separate fees for the service, and for the monthly payment for the phone. After X number of months (choosable on purchase, affects per-month phone payment), the phone is paid off and is no longer part of the bill. It's much more straightforward and easy to reason about, and you don't have to immediately try to upgrade when your contract is up so you don't feel like you're paying for more than you're getting.
That is the old model we had with pre-paid in Portugal back when mobile phones were introduced, however they were locked to the provider and it was a fight to get them unlocked at the end of the leasing time.
Eventually our version of FCC got around making it easy to complain if an operator would make someone's life hard regarding unlocking.
Verizon has at least broken the phone payments out, so a customer can compare the upfront price and a purchase contract. I guess the others have also.
Their advertising is still ridiculously misleading. They say the "Verizon Plan" starts at $35 a month, but that's before activating a device (which is $10 for a tablet and $15 for a phone) and taxes/fees. Cheapest phone is going to be ~$55 per month, it's ridiculous that they emphasize the $35 in their advertising.
That's what people buy - whatever is in the carrier store and whatever they see on TV ads. Besides isn't there a monthly plan most carriers offer?
I mean with Project Fi the Pixel phones could be a equally attractive deal for Regular Joe but they would still have to advertise it heavily and offer better value through extended updates.