Why are phones so expensive?

By Toby Groves

Phones are crucial to all of our lives. They provide many great features that we all use every day. However, recently there has been an increase of prices from all major phone and tech companies, such as Apple or Samsung. Phones have gone from being $200-300 back in 2010 to being closer to $1,000 now. Many people have a problem with the price increase, so why are phones so expensive now?

There are a few reasons as to why phone prices have been skyrocketing over the past few years. The first reason is that in the US, flagship phones used to cost $200 as part of a mobile phone contract, while the majority of the providers, like AT&T, T-Mobile, etc. made most of their money through monthly fees. Now that those contracts are dead, phone prices are all stated outright. That explains why, several years ago, the iPhone’s price suddenly jumped up to $649.

Another big reason phones are so expensive is because they’re a lot harder to sell than they were back in 2010. Nowadays, almost everyone in America has a smartphone, or has made a conscious decision not to have one. There are very few people who have never heard of a smartphone, so the market to sell smartphones to new users is very scarce. 

Most often, the only reason someone would get a smartphone is to upgrade from their old phone to a newer model. Because of this, tech companies have made newer models stand out with great new features, rather than small bug fixes and minor hardware improvements. Making newer models is also an attempt to alienate older models, further pressuring users to upgrade to a more expensive phone. Even with all of these pressures on users, it is harder to sell an upgraded phone to a returning customer than to sell a phone to a new user.

The cost of building a phone has increased as well. New phones are expected to run at a certain speed, have a decent camera, and have a good user interface. The time and cost of these parts is large, and since companies need to make a profit, they sell the phone for more.

Phones are so expensive for many reasons, but as we move in to a tech-absorbed world, the increased price is just a side effect of the increased quality.

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