iPhone use in Germany, Italy, Switzerland and Austria

Any European SIM is likely to work in all other countries, but outside its home country the phone will be roaming and higher charges will apply. This is usually a trivial problem with voice calls and SMS messages, that will cost a little more but not will not break the bank. Data are a completely different matter. Sometimes charges for data roaming are very high; there are often special offers for short term roaming, but you should check carefully and have them activated before connecting.

As an example, my Italian prepaid SIM (WInd) for a little more than 8 euros per month gives me 120 minutes of voice calls, 120 SMS messages, 1 GB of acceptable speed downloads. I am not an heavy user and it is more then enough for me when I am in Italy. But when roaming in Europe, I have an offer of 30 minutes of calls, 30 SMS and 30 MB for 3 euros a day - much more expensive and much more limited. Still, it is an offer. A download without activating the offer would eat up the credit in a very short time. It works if I stay out of Italy for a while. Being in the same place for ten or more days, it may be worth to check for local SIMs.

All SIM cards purchased in Europe work in all countries, that is taken for granted. It is called "International Roaming" and the charges are +25% to +50% of the standard charges.
Why don't you use your normal SIM card. Won't they allow International Roaming?

If not, see these two sites for SIM cards: www.lebara.com/
and: http://www.lycamobile.com/

If all else fails, a basic phone with SIM card locked to a pay-as-you-go operator is around €15-20, usually with about €10 starter credit. But make sure you can add credit over the internet.

Just sign up for the AT&T International Plan for a month. Upon your return, change your service back to your normal service. They'll charge you by the minute, but it'll be easy to call that way.

I switched to T Mobile because their $50 monthly all inclusive service. Their international rate is a very low $.20 per minute. Millions of their customers have switched over. And that's without any monthly contract.

http://www.theguardian.com/money/2014/jul/01/mobile-roaming-charges-cut-eu

See the above website for maximum intra EU roaming charges - it has a link to a useful table when using a SIM from an EU country in the EU.

It is also very likely that intra Europe roaming charges will be banned completely in the EU later this year (for SIMs from an EU country being used in the EU)

http://www.lexology.com/library/detail.aspx?g=d4b4b276-c59b-4e78-bc0a-b9ebe0ad1b6c

Voice is inexpensive and you have a few options, Data is the tough part.
The post by member asps2 is one of the most informative posts regarding cell plans that I have read on this forum!
Att will give you an unlock code, call them. Buying a prepaid sim when you arrive is the most economical way to get data. Reloading the card in a foreign language from another country isn't easy or economical. Buying a new card in each country seems like a pain but might be worth it. Here is some good information on the topic:

http://prepaid-data-sim-card.wikia.com/wiki/Prepaid_SIM_with_data

Also, set up a Skype or Viber account with about $10 in credit and use it on wifi to call home. Having my phone so people can call me on my regular number isn't optimal because of the time change.
Download city maps, Podcasts and anything else you might use ahead of time.

2015,

check what your provide can provide and the cost.

what i found was that some providers over there didnt have data roaming, some did.

one warning. If you buy a SIM overthere make sure you can add minutes outside of the country of origin. All of the SIMs i bought you needed to buy a voucher, before you leave, to use outside of the country.

happy trails.

Thank you everyone for your help. asps2, your comments were especially helpful. I checked with AT&T. Looks like I can unlock my phone (I have to call them just before leaving United States). I can purchase a SIM card in each country to minimize expenses. However, I would need to investigate each country. We will only be in Munich for four evenings and then we are off to Austria. After a couple nights in Austria, we are traveling to Venice and then over to Milan and up to Switzerland. Finally, we will head back into Italy for an extended period. AT&T would certainly be the most convenient. They have $30, $60 & $120/mo international packages. I think that by the time I were to invest in individual packages and get different SIM cards in each country, I might be better off just biting the bullet and going with an AT&T package. I am not intimidated by the SIM purchase but realize there are different carriers with different packages in each country. Since this is my first trip I will probably by the $60 package for convienence and watch my usage & minutes. I certainly have enough other things to think about during my trip!

Or, you could buy a cheap Eurobuzz phone just for using on the trip. It will work everywhere.