Why your iPhone and Android phone will be more expensive

Remember when the only phones with price tags greater than $ 1,000 consisted of leather, ruby ​​and sapphire? Thanks to Apple and Samsung, these days are over. The iPhone XS and Galaxy Note 9Starting price tags of $ 999 cement the phone to thousands of dollars as a new standard. Increase your storage capacity and prices are only increasing. If you want an iPhone XS with a storage capacity of 512 GB, you will have to pay 1,349 dollars, or 35% more. In the United Kingdom, this high-end phone costs £ 1,349 and $ 2,199 in Australia, and not even starting with the most expensive iPhone XS Max.

But the problem does not stop there. This new wave of higher prices for high-end devices is part of a broader trend that affects the prices of most phone brands, including Google, Huawei and OnePlus.

Premium models are not the only products to become more expensive; the mid-tier peripherals are also jostled. The iPhone XR costs 7% more than the entry-level iPhone 8 last year and 15% more than the iPhone 7. The OnePlus 6T, meanwhile, grew by 3.8% compared to OnePlus 6 phone published just six months ago, and a total of 37.6% in the last two years.

Data from 11 phone models from 2016 to 2018 show an upward trend in prices that we expect to intensify in 2019 and beyond (see your regional diagram below). Apple has certainly applied the model to other electronic products in its range, raising prices on new ones iPad Pro and Macbook Air compared to previous models and creating wide price fluctuations between the entry-level product and the superior storage version.

These paltry prices in Apple's wallet and in the mobile category indicate that the more expensive devices are here to stay – and it may be that our fault by buying them en masse in the first place.

When Apple broke the $ 1,000 barrier for its iPhone X in 2017, the critics made fun of its exorbitant price, but it quickly sells all other Apple devices every week since it went on sale on November 3, 2017. Apple's gambit has paid off as consumers have accepted higher-priced models, and that other manufacturers have followed the "Apple's". example of Apple.

The trend in favor of more and more expensive handsets in the top bracket underscores the importance of the cell phone as everything for communication, work, photography and entertainment. And as processing power, camera technology, battery life, and Internet data speeds improve generation after generation, the value users attach to a phone will not fail to grow.

"Consumers are willing to pay extra for a mobile phone because it is arguably the most important product in their lives," said Ben Wood, senior research analyst at CCS Insight.

Rising prices are not unusual in themselves. Faster and better components, such as processors and cameras, are more expensive to manufacture. The financial burden of researching and developing new materials is also incorporated into the final product. And inflation also affects the cost of goods apart from technology.

But spending on R & D and inflation do not tell the whole story of the insidious spending of your phone. By increasing the prices of their phones at each iteration, Apple, Samsung and other industry leaders are creating an ultra-high-end segment that makes every sale profitable – that's important because people are starting to keep their phones more a long time, for example. three years or more.

Yes, your phone costs more each year

With a few exceptions, the prices of major brand phones are on the rise.

"Although overall smartphone shipments will fall slightly in 2018, the average selling price of a smartphone will reach $ 345, up 10.3% from its price of $ 313 in 2017," said Anthony Scarsella, IDC analyst in the Worldwide Quarterly Mobile Phone Tracker, in a statement. with reporters in May. Prices will mostly go up on the high end, added Scarsella.

The rise is immediately noticeable when we compare the prices of phones today with the same model released just two years ago.

Apple's prices have risen at a steady rate for the iPhone and iPhone Plus / Max ranges, making the iPhone XS Max a spin-off of luxury.

Prices for Samsung Galaxy S, S Plus and Note are also increasing. Even before the $ 1,000 Galaxy Note 9 bomb, the S9 Plus – the iPhone Plus and the iPhone X from last year – was already close to the prices of the iPhone X.

Prices of US phones from 2016 to 2018

	2016 (starting price)	2017 (starting price)	2018 (starting price)	Percentage change in the 2016 highest price compared to the current model
iPhone (cheaper)	iPhone 7: $ 649	iPhone 8: $ 699	iPhone XR: $ 749	15.4%
iPhone X	N / A	iPhone X: $ 999	iPhone XS: $ 999	0%
iPhone Plus / Max	iPhone 7 Plus: $ 769	iPhone 8 Plus: $ 799	iPhone XS Max: $ 1,099	42.9%
Samsung Galaxy	Galaxy S7: $ 650-695	Galaxy S8: $ 720 – $ 750	Galaxy S9: $ 720 – $ 800	15.1%
Samsung Galaxy Plus	S7 Edge: $ 750-795	Galaxy S8 Plus: $ 785 – $ 850	Galaxy S9 Plus: $ 840 – $ 930	17%
Samsung Galaxy Note	Note 7: $ 834-880	Note 8: $ 930-960	Note 9: $ 1,000	13.6%
OnePlus	OnePlus 3: $ 399	OnePlus 5: $ 479 / OnePlus 5T: $ 499	OnePlus 6: $ 529 / OnePlus 6T: $ 549	37.6%
LG G series	LG G5: $ 576-689	LG G6: $ 600-720	LG G7: $ 750-790	14.7%
LG V series	LG V20: $ 672-829	LG V30: $ 800-912	LG V40: $ 900 – $ 980	18.2%
Google Pixel	Pixel: $ 649	Pixel 2: $ 649	Pixel 3: 799 €	23.10%
Google Pixel Plus	Pixel XL: $ 769	Pixel 2 XL: $ 849	Pixel 3 XL: $ 899	16.9%

British telephone prices from 2016 to 2018

	2016 (starting price)	2017 (starting price)	2018 (starting price)	Percentage change between 2016 and the current model
iPhone	iPhone 7: 599 £	iPhone 8: £ 699	iPhone XR: £ 749	25%
iPhone X	N / A	iPhone X: 999 €	iPhone XS: 999 €	0%
iPhone plus	iPhone 7 Plus: £ 719	iPhone 8 Plus: € 799	iPhone XS Max: £ 1,099	52.9%
Samsung Galaxy	Galaxy S7: £ 569	Galaxy S8: £ 689	Galaxy S9: £ 739	29.9%
Samsung Galaxy Plus	S7 Edge: £ 639	Galaxy S8 Plus: £ 779	Galaxy S9 Plus: £ 869	36%
Samsung Galaxy Note	Note 7: £ 700	Note 8: £ 869	Note 9: £ 899	28%
Google Pixel	Pixel: 599 £	Pixel 2: £ 629	Pixel 3: £ 739	23.4%
Google Pixel XL	Pixel XL: £ 719	Pixel 2 XL: £ 799	Pixel 3 XL: £ 869	20.9%
LG G series	LG G5: £ 539	LG G6: £ 649	LG G7: £ 599	11.1%
LG V series	N / A	LG V30: £ 800	LG V40 ThinQ:	N / A
OnePlus	OnePlus 3: £ 329	OnePlus 5: £ 449	OnePlus 6: 469 € / OnePlus 6T: 499 €	51.7%

We are witnessing the most shocking escalation of OnePlus, the price of which increases every time a new model arrives. OnePlus is currently on track for two variants a year: the OnePlus 6 debuted in June for $ 529 and the OnePlus 6T launched in October for $ 549. Again, the OnePlus 6T costs 37.6% more than the 2016 model in the United States. If you pay in pounds, the phone has become 51.7% more expensive in the last two years.

"As smartphone dependence has grown significantly in a short time, the quality and components required by the entire industry to meet high performance requirements have also increased," said a representative of OnePlus. .

According to LG, "key factors include component cost, competitor prices, operator incentives, rates, etc.," said Ken Hong, senior director of global communications for LG, in an email.

"The fact is that these input costs are increasing and we are forced to do the same," said Hong, adding that the introduction of new variants such as the LG V35 had the positive effect of lower the price of the previous model, in this case the LG V30. .

CNET has contacted all the manufacturers mentioned in this story for comment.

Interestingly, the Pixel 2 and Pixel 2 XL costs the same price as the Pixel and Pixel XL. However, Google raised the Pixel 3 price 23%, without adding a second camera to the rear and make minimal design changes. Google has pushed the price to the height of competition.

But making phones is more expensive now, right?

Phones, like all electronic devices, are composed of parts from different suppliers. If their cost increases, it is certain that the cost of the phones will be as well.

According to Wood, the demand for additional storage in recent years has led to higher prices, which has increased memory costs and encouraged suppliers to invest in building new plants to meet demand.

Adding more sophisticated cameras such as the 3D depth detection iPhone XS front camera or more lenses, such as the Huawei Mate 20 ProThree back shooters, cost more as well. The same goes for materials such as glass or ceramic for the support of a robust aerospace-grade phone or aluminum for the frame.

You can bet that the first phone to debut a diamond glass screen or the new, smudge resistant Gorilla satin vibrating glass will not be cheap. It is also costly for companies like Samsung to set up a new manufacturing process for items such as curved glass and flexible OLED screens.

Yet while the cost of all these components – called nomenclature – may partly explain why high-end phones cost more every year, many experts say that phone manufacturers are profitable.

"I certainly accept that some of the cost components come from components and the manufacturing process … but not to that order of magnitude," Wood said in a phone call in July. "I also think that Apple has made the strategic decision to increase the price of the flagship iPhone to maximize the returns of a truly incredible portfolio."

Carolina Milanesi, an analyst at Creative Strategies, agrees.

"These phones are certainly more numerous than ever before," she said in an email. "The nomenclature certainly increases for these devices, but I think there is a premium margin applied by the brands to their flagship products as they are status symbols."

Where is the price ceiling?

Apple's and Samsung's $ 1,000 phones are clearly just the beginning, and analysts believe buyers will give in.

"As long as phones are our main computing device throughout the day, buyers will be willing to spend more," said Milanesi.

Wood agrees.

"Apple continues to violate all the pricing rules for consumer electronics products," Wood said. "Once again, it is increasing the price of its flagship device, which comes at a time when competitors such as Samsung are under tremendous pressure, which only confirms the premium that people are willing to pay for them. Apple products. "

With the current iPhone XS, Galaxy Note 9 and Huawei Mate 20 Pro, the other players are right to do the same. Even mid-size models (again, the iPhone XR and the OnePlus 6T) can get away with increasing their price tags as devices cost relatively less. For example, the OnePlus 6T at $ 549 still costs nearly half of what you would pay for the iPhone XS, a relative value that many find pretty easy to swallow for a "cheaper" phone with higher-end components.

"When Apple announced the iPhone X for a thousand dollars (…), they have been doing service to the entire industry," Wood said. "This gave a little respite to all the other manufacturers and I can imagine that the hallways of Samsung, Huawei and others have sparked some pleasure."

In other words, while Apple could achieve the best profit, its bold iPhone X price also allows competitors to earn more money over the phone.

Do not worry, mid-range phones remain affordable

High prices on high-end phones may not mean that the cost of each phone will increase.

We continue to witness fierce competition in the middle and low end where phones like Motorola Moto G6 and E5 families make great value phones for almost the same price each year: $ 250, £ 219 or AU $ 399 for the Moto G6.

The Huawei Honor brand also manufactures mid-range and mid-range devices that balance value and cost, often in line with popular designs and features, such as slim cameras and portrait-style dual cameras that people are looking for. Xiaomi, Nokia, Oppo, Asus and other brands are also helping to close the gap around the world by quietly offering affordable basic phones for cost-conscious buyers.

Thus, although the most sophisticated and powerful devices are still on the verge of reaching their highest prices, there is still a strong demand for midrange and entry-level phones for people with a reduced budget or more basic needs.

If a $ 1,000 phone seems too outrageous to you, you may have to find beauty in a more modest phone, or overcome the shock of the sticker and accept the fact that a $ 600 flagship phone is already far away.

This story was first published on August 5, 2018 and was last updated on November 11, 2018.

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