So I went searching for that answer - and this is the closest to an answer they have:
https://help.raylo.com/en/articles/3050323-why-don-t-i-use-the-iphone-upgrade-programme-instead
Edit, and this one: How is Raylo sustainable? | Raylo Help Center
Tl;dr - they recycle the phone either by selling it or recycling parts, delivery in a cardboard box, and give you a compostable case.
Can you really sell a used 2 year old iPhone for more than £400?
Yes, no problem. A very quick look reveals that a phone recycling program will give £300 for an iPhone X (released 2017). A private sale would give you £400. Going for up to £435 on eBay.
Talking 300-350 minus eBay and PayPal fees for iPhone X , if you search by completed listings.
As phones get better they hold their 2nd hand value better.
Thats fair but there is hassle that comes with selling phones on ebay in our experience. We want to own that process by having the customer return the phone and saving the money rather than undertaking listing, selling, shipping their old phone. It also means the phones that are returned are placed in our reuse programme.
Tbh nobody goes on the Apple Upgrade programme to own the phone after 20 months, this is completely pointless… the whole point is that you get the latest phone every 12 months, hence why it’s called an upgrade programme…
Apple’s trade in programme leaves a lot to be desired, I’ve heard too many stories about people not getting the amount that’s quoted when you do it online…
and for anyone thinking of selling their phones on eBay and actually getting paid, good luck 
The way I see it, these Raylo guys have designed a service that takes the hassle out of upgrades, trade-ins and selling your phone all baked into the price… I will look into it more as some things aren’t completely clear to me…
I found this hidden away at the bottom of the webpage:
I see what they mean now… By returning the phone they sell it to someone else so it doesn’t end up in a drawer
Sounds like way too much hassle to me…
These raylo guys offer full insurance for £6.99 per month, Applecare is just accidental damage right?
I’m on the Apple Upgrade Programme. Whenever it’s upgrade time, I fill in a form, head along to the Apple Store, pick up my new phone and they take the old one away.
The only hassle in that is having to go to the store.
Or it’s on your home insurance anyway
I had a quick look last night and it seems most phones at 2 years go for about 25% of their sale value in the recycle schemes.
So the iPhone 11 Pro 64GB they advertise, if you bought it outright you could get about £250 for in a recycling scheme.
Did a quick comparison of what you spend vs just going direct to Apple - buying direct vs apple finance…
I feel like this business model is relying on people not doing any calculations, and just looking at the monthly price.
I’m still waiting to hear why they think this statement is justified:
(to be fair, they did not say cheaper)
Thanks for your response Ben and I do take this feedback on board. That 2 year sale price is realistically not guaranteed and the cheapest way to go is buying outright… with Raylo you upgrade to your new device and keep paying the same price and the upgrade process is way less hassle. So if you want a lower monthly cost, better insurance and to upgrade every 2 years we think we do have offer a great alternative.
Also on the home insurance point, that might not cover you for accidental damage, loss or theft outside your home, our insurance does.
This feedback is good to hear, thanks.
I also don’t think it’s any more transparent, or less complex… But hey. Clearly not for me!
How does it compare when you factor in insurance?
Insurance with banks is roughly £8 a month I believe, So-Sure are insuring my phone though for about £100 a year, so add that into the calculation
For the iPhone 11 Pro 64GB, they offer insurance for £8.99 / mo,
A quick look for other mobile insurance packages, show prices between £9 - £13 top end for Unlimited Claims (Raylo have 2), and excesses between £60-£100. The very cheapest I saw was £6/mo with similar restricitons
One with the best excess I saw, was Cover Cloud, with £10.30 per month, with a £60 excess, with a greater level of coverage.
I’d say the cover is about average with whats on the market.
I cant speak for the examples you’ve found but in terms of average cost of insurance it may be a bit higher than you think. The networks charge in and around £15 per month for insurance.
Edit - looking at the Cover Cloud policy there are some things to be aware of:
We cover you on the first 2 points above and you can take your Raylo phone to an Apple store or Apple certified shop for repair if it gets damaged.
Just checking on MSE £80yr (£6.66) - £120yr (£10)
Your insurance covers accidents, liquid damage, theft and unauthorised calls (up to £1,000) plus loss of the phone. You also get overseas cover.
Excess £75 to £150 (depending on model and memory size).
https://www.moneysavingexpert.com/insurance/cheap-mobile-phone-insurance/#11
