Bug eyed at the prices of top end smart phones? We don’t blame you. With flagship phones rapidly nearing the $1000 mark, not many of us can afford to pay outright for the phone that we want. But just why are phones so expensive these days? And what’s the best way to cut costs? That’s what we’re here to take a look at.
Are Phones Really That Much More Expensive?
Prices go up, that’s a fact of life. So before we get into details, we thought we’d do a little experiment to see if phones really have increased in price. As examples, we’re looking at iPhones and Samsung Galaxys, two of the most popular flagship phones around, and we’re covering a five year period from 2012 to 2018.
First up is the iPhone. In 2012 the top iPhone you could buy was the 64 GB iPhone 5, and it retailed for $699. Right now, the top Apple phone on the market is the 256 GB iPhone 7 Plus, which retails for a whopping $919. That’s an increase of 31% over the last five years. Okay, okay, maybe the big screened iPhone Plus isn’t the best comparison, so what about the regular iPhone 7? Well, that retails for $799, still making an increase of 14% since 2012.
What about those Samsungs then? Well, in 2012 the best Samsung was the Galaxy S3, and that retailed for a round $500. These days the top end Samsung is the Galaxy S8 Plus, and that’s an eye watering $779, so an increase of 56% overall. Again, maybe the S8 Plus isn’t the fairest comparison. But the regular S8 sells for $689, so there’s still been a 38% increase in price over the last five years.
Hold up. What about inflation? In a recent study the mobile phone comparison site Tiger Mobiles calculated UK and US inflation comes to a total of around 7.6% over the last five years, which doesn’t come close to matching the numbers above. In simple terms, that $699 iPhone 5 should equal $782.88 in 2017 money, whilst the $500 Galaxy S3 should equal $560 in 2017 money, accounting for inflation. But the real 2017 prices are much higher than that. The conclusion? Phone prices have definitely risen, and risen a lot…
But Why?!
There are a couple of very legitimate reasons why the price of phones has gone up. Would you be willing to use a 2012 Galaxy or iPhone today? Not many people would, since the tech specs are vastly different. Flagship phones these days do tend to contain high end parts, like fingerprint scanners, faster chipsets, top end cameras, and high resolution screens. These are components that just weren’t available in 2012, and adding them in means that price gets higher. Plus, materials have changed. Whilst we might have been content with a plastic frame or build phone in 2012, these days we expect that aluminium unibody build, and that’s pricey.
It’s tough to get real info on that actual cost of making a phone, since manufacturers tend to keep that information pretty secret. However, there are a couple of leaked examples that tell us that the cost of building a phone has risen, and not necessarily in line with inflation. The Samsung Galaxy S2 from 2011 is estimated to have a build cost of around $215 ($166.82), whilst the Samsung Galaxy S6 is estimated to have cost about $284 ($220.36), which is a build cost increase of 32% over a four year period. This indicates that the increase in actual consumer price is fairly equal to the increase in the cost of the component parts. You can also add into that the increasing cost of hardware and software developers as the programmes they work with become more complicated than ever.
Something that goes some way to proving this point is looking at high mid range phones. A solid mid range phone that goes for around the $600 mark (so mid way between the cost of a 2012 iPhone 5 and Galaxy S3), has more or less the specs we’d expect to see on those older phones. That’s not to say that there isn’t an element of profit in all this, there could well be, but the increasing costs of materials, components, and labour do seem to justify the increase in prices that we’re seeing.
How to Reduce Costs…
There are ways of reducing the costs of that new smart phone. The most obvious of these is, of course, to opt for an older model or a mid-range, rather than top end model. If you’ve got your heart set on that brand new, top of the line device, then probably your best deal is going to come on contract through an operator.
It used to be that buying on contract actually cost you more money, but that’s really no longer the case. Network operators make their profit on service, rather than on hand sets these days. For example, that Samsung Galaxy S8 Plus that costs $779 is currently available on contract from for $48.58 a month for 24 months including unlimited calls and texts and 8 GB of data. That’s a total cost of $1165.92 for the whole contract. Take into account that the service plan alone (unlimited calls and texts and 8 GB of data but no phone) is $23 a month, so $552 for 24 months, and subtract that from the above, and that phone ends up costing you just $613.92 over the course of your contract…
There are other options. Buying a refurbished phone can generally save you a few pounds. Most refurbished models sold through operators are new phones that have been returned, but since the boxes have been opened they can no longer be sold as new. And waiting a couple of months after a phone’s release date can help too, since many phones drop in price after around three months on shelves (be warned, this doesn’t generally hold true for iPhones).
Big phones cost big money, but to be fair, they also cost big money to make, so this isn’t all about greed. There are ways that you can save, but if you want that top end phone, then you need to resign yourself to the fact that it’s going to cost a fair whack.