What is the reason behind the high prices of smartphones in general and the flagship in particular?

 Since its inception and years later, these smartphones were not as expensive as it is now and for the first time in the past few years we have seen flagship phones that cross the $1000 barrier and it seems that the curve of smart phone prices will continue to trend upward and will not stop soon, Here an important question arises in the minds of many, what is the reason for the high price of flagship phones (Flagship), continue reading the article to know whether it is due to the greed of companies or there are good reasons.

Lots of powerful features

It's no secret that smartphones are getting stronger every year. As for the flagship phone market, users’ expectations rise dramatically, and until manufacturers keep pace with their users’ expectations and ensure their satisfaction, they are working to support their leading devices with amazing features, which include better screens, LTPO technology, more and more powerful cameras, higher RAM, and of course more storage space, and of course these features do not come for free. Giant companies are investing in research and development to access these features and are charging the consumer with that cost.

inflation

Although the powerful features of flash phones may seem a sufficient reason to justify their high prices, we can not forget about inflation, which plays an effective role in increasing the prices of smartphones, and you must know that inflation affects all industries, not just smartphones. Governments publish annual inflation rates, which directly measure how the cost of goods has changed over the past year.

Let's use an example to illustrate this point. iPhone 6 launched in 2014 for $649. According to the calculation of US inflation, today this rate is equivalent to $793 due to a cumulative inflation rate of 22.1%.

According for Egyptian inflation (The average is about 20%), the iPhone 11, which was launched in 2019 for 12900 Egyptian pounds ($ 699), this price today in 2022 is equivalent to about 15535 Egyptian pounds.

This is what inflation does, it devalues ​​the currency to become less day by day which leads to higher prices and the higher the inflation, you will have to pay more to buy the same amount of a commodity that you were able to buy a year or two ago. Thus, smart phone companies need to raise the prices of their devices to cope with inflation, and as usual, the cost is charged to the consumer.

smart phone components

The cost of smart phone components and parts is also increasing, according to market research firm Counterpoint Research, the iPhone 12 components cost $415, an increase of 21% over the iPhone 11 components, along with an additional $23 for OLED screens and about $34 more due to support for 5G networks. .

Even the ingredients that you Camel By designing themselves and making up 16.7% of the total cost of the device, it also increased, and the same applies to the rest of the smartphone manufacturers that have flagship phones that must upgrade them from time to time in order to keep pace with consumers’ expectations and compete with other companies, and since the parts and components become expensive, companies will not bear Those costs, someone has to pay for them, and that person is you.

Manufacturing costs

It is not only the components that have risen, even the manufacturing process has become expensive, in order to manufacture a new design with a certain size and innovative and new features, it is not easy or cheap, do you know why there are great phones at cheap prices, the manufacturers of those phones do not offer or create anything new All they have to do is reuse one of the old designs and as the manufacturing process becomes more efficient, costs are cut and phones come out with cheap prices.

The latest example is the iPhone SE, one of the reasons it came at a lower price compared to other iPhone devices, that Apple re-used the design of the iPhone 8 and replaced only the processor and some other parts and it's over.

 Costs associated with sales

It's not just about inflation, components and the manufacturing process, there's also shipping, advertising, operating costs, and sales-related processes, and we won't forget, of course, taxes. Merchant to $12 and so everyone is happy, Apple and the seller and the carrier, not you.

We keep our devices longer

This is a fact that many people know about, and one of the main factors behind this is that we are keeping our devices for longer than before, this means a decrease in sales, and in order for companies to face this problem and maintain their profits, they increase prices, and for this you find that phone sales are trending It has been declining since 2019, but the revenues of the companies have been stable in general and the reason is the price hike, and according to the market research company Counterpoint Research, smartphone revenues grew to an all-time high of $448 billion in 2021 and Apple had the lion’s share of about 44%, or $196 billion of Total amount.

luxury item

If you need a smartphone, there are many options available that will suit your budget whatever. As for the flagship phones, it can be said that they have become a luxury item that you can live without and nothing will happen. If you are looking for real value for your money, you will find it in the mid-range phones category. Buying a flagship phone means that you are paying for luxury because those devices have become luxury goods.

In the end, these were the reasons behind the rise in the prices of smartphones in general and the pioneers in particular, as the flagship phones (flagship) became as strong as they always were with a lot of new features to the point that they became luxury goods and inflation plays an important role and with the high cost of living, people keep their phones for longer From the past, forcing companies to raise prices and achieve profits, and it seems that this trend will continue in the near future. Whatever the reason, you are the one who pays the price.

Source:

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