While the actual cost of manufacturing a smartphone is lower than the final price, the total price of the device includes the cost of distribution, research, development, and marketing. The World Intellectual Property Organization (WIPO) recently published a report on smartphone profits, giving three examples. For comparison, a smartphone costs around $1,060 to manufacture. In comparison, a smartphone that costs $350 cost less than half as much.
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A high-end smartphone costs over $1000, but that figure doesn’t include the costs of the company’s staff and facilities. Apple has tens of thousands of highly skilled workers who make the phones. Besides that, the company has high technology costs, and a large R&D budget, which it uses to develop new features for its phones. For example, the new iPhone 13 Pro retails for $1,449, but it costs Apple only $570 to manufacture.
For Samsung, the Galaxy S21 Ultra costs $533 to manufacture. That’s nearly $200 less than the S20 family. Counterpoint Research has looked at the bill of materials for the Galaxy S21 Ultra and estimated that it costs $533 to produce a single unit. As a result, the $1,199 128GB model is 7% cheaper than the S20 Ultra. Aside from being cheaper than its predecessor, the Galaxy S21 Ultra also has a Snapdragon 888 processor.
The iPhone has high costs because of its high demand, which makes it necessary to sell at such high prices. Apple needs to charge high prices to justify the high cost of the phone, but it’s a lucrative business for the company. Google was also trying to establish Android as a platform, and they make money from advertisements, search, and services. So what’s the price? It’s a matter of personal preference, and it depends on the network tariff and whether you’re upgrading from a previous phone.
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