The Soaring Prices of Mobile Phones
In 2010 the cost of an average smartphone, due to a lack of choice and a highly monopolised market, was $440. This is the highest average price of the last decade as an increase in alternative manufacturers and new cheaper technology to drive these new models. In the years from 2010 to 2016 the average price declined rapidly with $333 in 2013 and $283 in 2016. These decreasing prices, thanks to the shared nature of the android operating platform across thousands of manufacturers, have been counteracted by the ever-increasing price of Apple’s handsets.
Consumers have had the luck, since 2012 anyway of constantly declining prices for smartphones thanks to the mass market appeal and low-priced ‘giant killers’ that entered the industry to take on giants such as Apple’s iPhone. This has all started to change once more, as between 2016 and 2017 the overall price of smartphones rose by 6%. This rise of 6% has been attributed to how more consumers are investing in bigger and better displays, more detailed cameras and computer competitive processors. More worryingly for consumers, data from Gfk that the price rise between the final quarters of 2016 and 2017 showed an increase of 10%, bring the price to roughly $340.
Where has this rise in costs begun? It seems that it is rooted in the very first stage of creating a mobile phone, the components. The businesses that create this components are, for one reason or another, now charging more for their items than they did previously, meaning that it is harder for the smartphone companies to maintain profit levels without increasing the cost of each unit. A lack of competition in the manufacturing of these components has enabled the negotiating power to lie with the component creators. One company that has been able to avoid this thanks to its foresight is South Korean giant Samsung, although looking at the prices of their latest flagship models you wouldn’t believe this was the case.
Once the phones have been released by the manufactures, this increase in prices hits retailers who, keen to capitalise on consumer interest, have a suitable price rise themselves. The increase in the cost of handset has inevitably led to an increase in mobile contract prices. Already potentially lethally expensive, the rate of interest earned by service providers may have stayed the same meaning the end amounts are getting increasingly larger. When it comes to renewing your mobile contract, be sure to make the most of the information available online and money saving companies such as price comparison site MoneyPug.
Changes in prices haven’t just come from the mobile phone manufacturers but also service providers.
Most of the UK’s mobile service providers providing fix contracts have continued to raise their contract prices in alignment with the retail price index (RPI) in order to account for inflation. Regular consumers who had what they believed to be fixed monthly prices have been affected by these changes that have been written into the small print of their contracts. In 2017 Vodafone, O2 and Three raised their prices by between 2.6% and 3.2%, which has since risen to 4.1%.