It’s 2018. We live in the world where each new day a new tech takes place in every industry. Moving everything on the side, especially, if we talk about the smartphone market, the industries are implementing new ideas in the manufacturing of smartphone. Absolutely, it is necessary to change the world. However, people often think why the smartphone prices are higher than it should be in actual?
For the company, to manufacture a smartphone is not an easy stuff as we think. To implement the new ideas and make those ideas live in working smartphone requires the research. Let us say, for now, we have all of those necessary parts available to assemble that requires in a smartphone. But, how much money does a company pay to purchase or manufacture those parts for a particular model of phone? For now, it is important for us.
How Much Parts Costs?
Parts: simply we can say all the components used to manufacture a whole smartphone. Look, the total cost of the parts are super low than an actual price. So, please don’t think that you are extremely cheated by the smartphone manufacturer. There are much more other parameters that affect the overall price.
Of course, we are here to calculate the costs of the components of the phone. So, we will not include the developer’s investment.
IHS Markit which provides the data and information services of different industries. According to the report issued by the IHS, the total manufacturing cost for manufacturing the Samsung Galaxy S8 device is $307 only while during the launch the device was got the price tag of $720. This is a literally huge difference. And for Apple’s iPhone X, the manufacturing cost is $370 only while the device costs $999.
The above image was released by the IHS Markit in which it shows the price of different components for the iPhone X and Samsung Galaxy S8 device. It is clearly seen from the graph that the cost of the display is so much higher compared to the other elements. While the battery costs too less.
So, Where Other Money Goes?
Obviously, now you are thinking where other money goes? How much there is a profit margin of manufacturers?
From the above-detailed paragraph, we have seen that the manufacturing of any smartphone is not costlier for any company. In the majority of cases, it happens that the newly invented tech in the smartphone doesn’t make anyone clap for the company. So, it is not necessary that company takes everything from you.
The smartphone manufacturers calculate the costs that include the following;
- Research Costs
- Distribution Costs
- Machine Costs
- Development Costs
- Marketing and Advertising Costs
As per based on the analysis the smartphone manufacturers spends more money on the marketing and advertising of their new product. This is the only way from where they put their newly launched image in front of people. It doesn’t matter whether the companies are popular or not. We all have seen some sweet advertisements for iPhone X and Galaxy S8 on televisions as well as on the web.
Now, I think you know why the smartphone prices are higher than it should be. Let me know what do you think about this topic.
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