New phones tend to come with high price tags and we have seen this with the Google Pixel XL, the Samsung Galaxy S7 and the iPhone 7. So are the phone makers being greedy when to it comes to profits? How much does it cost to make the phone compared to the asking price for it?
The iPhone 7 and Pixel XL both come in with starting prices of around $650 and the Samsung Galaxy S7 even higher with a price tag starting at around $670. It has been said that the estimated Bill of Materials for the XL 32GB version is about $285.75 and this includes the costs of assembly and components. Of course the difference isn’t all pure profit for Google as you do have to take into account there are other costs, such as marketing, software, R&D, as they aren’t included in the BoM.
The Samsung Galaxy S7 costs around $255 to make and the iPhone 7 comes in at around $224.80. The S7 price tag is $670 so that is a difference of $415. Even when you take the extra costs into account the company should be making a large profit, so in effect they could bring the price tag down.
One of the most expensive parts of the Google Pixel XL is the display. This has the AMOLED panel of Samsung and Gorilla Glass 4 on top of it. This comes in at around $58. The Qualcomm processor comes in at about $50, the RF costs are thought to be around $19.50, the power management components about $11 and the audio codec is $15.50.
The memory components are $26.50 and the battery from LG comes in at about $4. The cameras are $17.50 and the enclosure of the Pixel XL is said to cost around $35. The charger, documentation and cables cost around $10.
So what do you think about the costs to make the device and the amount that consumers have to pay, is the company making a big profit on each of the handsets they sell and could they charge less for them?