We live in a world where the sound of the shattering glass on a phone is more fatal than breaking a bone. Consumers are paying unbelievably high prices for phones nowadays, and companies aren’t slowing down on their annual price increases. So why are our phones becoming as expensive as a vacation?
Let’s start with a company’s flagship phone. What is a flagship phone? In phone standards, it’s the main product of manufacturers. Flagship phones usually offer the top specs of any of their devices and a high price tag.
Four years ago, flagship phone prices were around 800 dollars, topping with the iPhone 6 plus at around $950. Now, price ranges are reaching from $900 to $1,000. The iPhone XS Max, however, reaches an astonishing $1,449.
Why the inflation of prices? The main reason is the cost of materials. Phone screens, memory, and batteries are all major components that continue to expand. Additionally, taxes are also a major factor when selling phones in foreign countries.
While the prices of smartphones have risen mainly because of the expenses for parts, most companies still receive around 60% of the profits. This plays a huge part once prices reach above $1,000, because it means they receive a profit of over $600, reaping consumer’s wallets.
Phone companies should be restricted in their profit margins so that smartphones can become more affordable. A 50% profit margin should be the maximum a company should receive. Additionally, phones should be sold in relevance to its production cost instead of a luxury factor such as a slight software increase or simple brand name.
Unfortunately, phone companies can continue to increase prices as long as consumers buy their phones. Despite the iPhone X’s $1,000 price tag, Apple sold over 29 million units, which means that with a profit margin of 64%, a staggering total of over 18 billion dollars.
However, prices may begin crashing once consumers begin to realize prices have reached an absurd level. This could drastically damage tech companies and stock markets. Realistically, though, this would only occur if customer loyalty is hindered or a major scandal happens, such as a deliberate slowdown of a last generation phone through software, which would force consumers to upgrade.
On the bright side, the trend of rising prices has also given certain companies a name for themselves. Oneplus, for example, sells flagship quality phones for hundreds of dollars less, making them a worthwhile alternative. Additionally, their Oneplus 6T will be the first phone arriving on the western market with a fingerprint sensor in the display.
Consumers are infamous for avoiding small brand products because of the guarantee of its functionality though. They also avoid small brand phones because it doesn’t give them “bragging rights” and isn’t well known among their peers. This mentality has grown due to phone companies dominating the industry and influencing consumers to stay within their brand or ecosystem.
Alternatively, consumers could also buy refurbished phones for a considerably lower price. Best Buy, for example, sells refurbished phones with a limited warranty. Additionally, websites such as Craigslist, Ebay, and OfferUp feature local sellers that usually offering considerably lower prices.
Phone manufacturers are increasing their smartphone prices every single year, and consumers are still rushing to the stores with every release. If consumers continue to buy a phone regardless of price, then prices will never decrease. Companies should be restricted mainly on their profit margins and consumers should stand up to phone companies and their prices, choosing not to buy their phones unless change is made.