"This is what we do -- low prices is what we do," Walmart spokeswoman Sarah Spencer McKinney told ABC News. "As a price leader, we are always looking for ways to surprise our customers with low prices and disrupt the competition."
McKinney said the deal, which began Friday, will last through the holiday season and will only be available to in-store customers looking to sign a new contract. The phone is available through Apple for $99 with a two-year contract.
The price drop from Walmart and Best Buy comes as the higher-end iPhone 5s has been sold out at both stores since both models were premiered two weeks ago.
"I think the 5c has gotten overshadowed and, given that the 5s isn't available everywhere, this is a way to get people excited about the latest and greatest Apple product," Stephen Baker, vice president of industry analysis at the market research company NPD Group, told ABC News.
Apple has yet to comment on the megastores' deals.