They either buy used or a couple generation old. I've never paid more than $350 for an iphone myself. If you don't "have to have" cutting edge, then older phones are fine.
In the last decade I have never paid more than $0.00 for an iPhone. Just wait for mobile carriers to offer free phones. I switched from T-Mobile to Verizon 2 weeks ago and got a 128gig iPhone 13 mini for free. I actually wanted the SE because I like the home button but it was $400 some bucks. Carriers are constantly having promos like that when they have excess stock, the promos are just not always advertised.