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As we often hear when popular new phones come out, the Samsung Galaxy S7 is far cheaper to make than it’ll cost you to buy. It’s said the bill of materials for the device — which lists all the components used and their associated costs — adds up to just $255 (the Edge variant is likely to be a bit higher, but we don’t have the numbers for that just yet).
Now, before you call foul on Samsung (or any other company) for nearly tripling that number for its price tag, remember that there’s more to a smartphone’s cost than the cost of its materials:
- Samsung has to pay top-level engineers to research and design the smartphone.
- Samsung has to build machines to manufacture the smartphones. Those machines exist inside big buildings. Those buildings and machines need power. Workers need to be paid to run those machines.
- Samsung has to pay a marketing team to create an ad campaign, and then they have to pay for advertising space and time.
- Samsung has to distribute the smartphones on a worldwide scale.
As you can see, there are a lot of moving parts to launching a top-grade smartphone and that cost has to be recovered while leaving room for profit at the same time. Consumers have to eat those costs if they want the device, so we get stuck with the heavily inflated $700 price tag. It’s worth thinking about the next time you loathe paying that hefty price tag for your next smartphone.
[via Re/Code]
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