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Why are smartphones so expensive?

When the cost of the iPhone exceeded the psychological mark of $ 1000, many began to resent the fact that smartphones are becoming more expensive every year, and there are almost no major innovations. And this concerns not only Apple, but also Android manufacturers, whose technology has always been considered as a more budget option.

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How much did the iPhone and Samsung go up?

The rise in price is seen by all who are at least a little following the smartphone market. But before we figure out its causes, let's see how quickly prices go up.

Let's start with Apple. Below is the starting price of various iPhone models in the US and in Russia. Special discounts and operator promotions were not taken into account.

  • 2014: iPhone 6⁄6 Plus - $ 650/750 (40/47 thousand rubles)
  • 2015: iPhone 6S / 6S Plus - $ 650/750 (57/66 rub.)
  • 2016: iPhone 7⁄7 Plus - $ 650/770 (57/68 rub.)
  • 2017: iPhone 8⁄8 Plus / iPhone X - $ 700/800/1000 (57/65/80 rub.)
  • 2018: iPhone XR / XS / XS Max - $ 750/1000/1100 (65/88/97, etc.)

Yes, over the past five years, the starting price of the iPhone has changed significantly. But it is interesting that in the period from 2014 to 2016 in the United States, it practically did not rise. In the Russian market, the first sharp rise occurred in 2015.

Let's see what happened at this time with the prices of premium smartphones from Samsung . For example, let's take the simplest modification of the younger Galaxy S model and the basic versions of more advanced flagships. Their prices at the time of release in the United States and Russia were as follows.

  • 2014: Galaxy S5 - $ 650 (30 thousand rubles), Note 4 - $ 750 (35 thousand rubles)
  • 2015: Galaxy S6 - $ 700 (50 m. P.), S6 Edge + - $ 770 (62 m. P.)
  • 2016: Galaxy S7 - $ 670 (50 m. P.), Galaxy S7 Edge - $ 780 (60 m. P.)
  • 2017: Galaxy S8 - $ 720 (50 m. P.), Galaxy Note 8 - $ 900 (70 m. P.)
  • 2018: Galaxy S9 - $ 720 (60 m. P.), Galaxy Note 9 - $ 1000 (70 m. P.)

It can be seen that for 3 years - from 2015 to 2017 inclusive - the company did not change the pricing policy regarding the younger version of the Galaxy S on the Russian market, although the technologies used in smartphones have progressed significantly.

What is the cost of a smartphone?

Prices for equipment (especially imported) are influenced by various economic processes. Other, seemingly insignificant factors play an important role in pricing. Today, more and more consumers attach importance to design, case material, framelessness and color reproduction of the display. For the manufacturer, the desire to please consumer tastes entails high costs, so the cost of the product increases.

On the IHS website you can find data on the cost of iPhone, released over the past five years:

  • iPhone 6 - $ 185 (2014)
  • iPhone 7 - $ 200 (2015)
  • iPhone 8 - $ 255 (2016)
  • iPhone X - $ 370 (2017)
  • iPhone XS - $ 410 (2018)

As you can see, the cost of the iPhone from 2014 to 2016 grew at a slow pace. But after Apple began to introduce unique innovative technologies, the production of one smartphone began to cost the company much more expensive than before. Moreover, this amount includes exactly the factory production, and if we take into account the costs of research work, prototypes, engineering and design works, the cost of the iPhone will turn out even more.

How does the dollar affect the price of smartphones?

The price increase is often explained by the fact that the value of the dollar against the ruble is growing. First of all, this affects the electronics, since almost all the equipment sold in our country is produced abroad.

In 2014, the average cost of $ 1 was approximately 38 rubles. Today, its price is already 67 rubles. It turns out that in 2014 the price of the iPhone 6 in the United States would be equivalent to 24,700 rubles. But if the dollar had not appreciated against the ruble, the starting price of the iPhone 6 today would be 43,550 rubles, that is, 18,850 thousand more.

And if the release of the iPhone X would take place not in 2017, but in 2014, then the price of this advanced smartphone in rubles would be 38 thousand - 5.5 thousand cheaper than the iPhone 6.

How does inflation affect the price of smartphones?

Since Apple is a company of American origin, its pricing policy is influenced by US inflation. Since the release of the iPhone 6, it has been incomplete 5 years. For the economy, this is a very short period, but it was enough for Apple to substantially adjust the prices of its products. According to the CPI calculator, the iPhone 6, which cost $ 650 in 2014, today, taking inflation into account, would have cost $ 685, or 46 thousand rubles, according to Russian standards.

But what about the overpayment for the brand?

We all know that for Russian buyers iPhone costs about 1.5 times more than for Americans. Count a little more. If the American price of the iPhone 6, taking into account inflation today, would be 46 thousand rubles, in Russia it would be offered for 69 thousand - at the price of the iPhone XR or iPhone 8 Plus.

Is it really because in some countries people are more likely to overpay for brand logos? Only in part. The price is formed taking into account many factors. The thing that most influences the rising cost of mobile electronics is the dollar rate, inflation, and rising development and production costs. In addition, when exporting, the manufacturer has to take into account transport and customs costs.

So is it possible to say that the prices of smartphones have soared in recent years solely at the whim of brands that are thirsting for even more profit? Not. The reasons for the rise in prices are more complicated, and they have little to do with the desire of corporations to cash in on loyal fans.

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