Have you ever wondered why the price of smartphones is rising? Or why some applications cost so much? The reason behind this isn’t just greed, there is a science to it. It’s obvious that smartphones have come a long way since their inception. Everyone had a big screen and could fit in your pocket right? Not any more.
Desire for larger screens has resulted in companies like Samsung and Apple creating bigger devices that require more parts. In fact, the biggest trend today is making the entire phone out of beautiful glass and metal. And while they are touting this holistically, it’s really just more parts to produce and make which drives up the supply chain costs per device.
Flagship smartphones are selling for top dollar: a new iPhone will set you back about Kshs130, 000, the latest Galaxy S Fold about Ksh. 120,000 , and Tecno’s offering about Khs20,000- Ksh50,000 for their mid and high end smartphones. And that’s just the beginning. If you’re in the market for a new phone, these days you can expect to drop at least $600 on a high-end device but most are above these figure.
Low range smartphones have not also been left behind. So what is causing this constant rise in smartphone prices?
Improved but Expensive Features
The main reason that smartphones are getting more expensive is because of improved features. The latest phones are packed with so much technology, they can do almost anything. They have high-resolution cameras, powerful processors, and large displays. This means that they need more parts to make them work, which drives up the cost.
The most expensive phones also have water-resistant designs and wireless charging capabilities, which weren’t available on previous models.
In addition to these improvements, smartphones are also becoming more expensive because of the materials used to make them. Phones now tend to be made with metal frames instead of plastic ones, which can make them feel sturdier than older models but also makes them cost more to manufacture.
However, there’s another reason why smartphones can be so expensive: people want them! Smartphones are incredibly popular devices—and for good reason! They’re powerful, convenient and easy to use, so consumers will continue to pay high prices for them as long as they continue to see value in owning these devices.
Smartphones have gotten more expensive in recent years because of the increasing competition among companies.
As phones become more and more advanced, the companies making them are forced to make them better and better in order to stay competitive with other brands. This means that they have to invest more money into research and development, marketing, and other things that go into making a product.
If one company doesn’t invest as much as another company does, then they may lose their customers to their competitor’s more advanced phone.
Cost of Production
The cost of producing a mobile phone has increased dramatically over the last decade, due to the increased complexity of the device and its components. The cost of producing a high-end smartphone can be as much as $400,000, with the average cost being around $200,000. This is because modern smartphones have more complex features than before and require more advanced materials to produce them.
The cost to produce a smartphone is difficult to estimate, but it can be estimated based on the total value of all smartphones sold in a year. In 2015, 1.2 billion smartphones were sold around the world. This number grew to 1.9 billion in 2016 and 2.1 billion in 2017. The total value of those devices was $331 billion in 2015, $400 billion in 2016 and $453 billion in 2017 (Statista, 2018).
The price tag for all of these devices was about $20 billion each year from 2015 to 2017 (Statista, 2018). This means that there was an average production cost of $80 per device from 2015 through 2017—a number that does not include marketing costs or other expenses associated with bringing the product to market (ex: research and development).
The cost of production is one of the biggest factors in determining how much a smartphone costs. The cost of production includes things like labor, materials, and shipping costs.
Smartphones are made up of many different parts and pieces that need to come together seamlessly to create a functioning device. Each part has its own set of manufacturers and suppliers, each with their own pricing models. These suppliers also have their own overhead costs, so they pass those on to smartphone manufacturers.
The total cost of production depends on how well-known the brand is and how many units they’re producing at one time. A smaller company may only be able to produce one or two thousand phones per month, but a large company might make thousands per day! It can also depend on where the manufacturer is located—if it’s closer to where your customers live, it’s going to cost less for them to ship those phones out to consumers and vice versa.
The prices of both low range, mid range and high end smartphones will continue to rise. The reason for this is due to the fact that there are many competitors in the market today. As a result, companies need to have a price advantage over their competitors so that they can stand out from them. If a company does not offer a competitive price, then they may lose customers to another company who offers better deals.
This means that companies will always be trying to find ways to reduce costs while maintaining high quality products. This is why they will make sure that they use materials that are more durable and last longer than others on the market today.