How close is the cost of a new tablet or smartphone to its manufacturing costs?

When it comes to their prices to the consumer, tablets and smartphones are an oddity in the tech market.

While some brands like Apple are known for having what is basically a ‘charge whatever we want and people will pay it’ model, the vastly more competitive Android market sees huge differences in price based not only on the brand and technology, but also on how the phone or tablet is purchased.

With customers – for example restaurants that use imageHOLDERS tablet kiosks for ordering – there are some pricing schemes for contract business users that can vary too. To understand the economics of this, it is first important to know how much it costs to manufacture a premium device, and how this differs from how much it costs depending on different factors.

A look at one of the leading devices

One of the current leading devices on the Android market is the Samsung Galaxy S7. This is Samsung’s flagship phone, and as one of the bestselling manufacturers of Android smartphones and tablets, they are a good benchmark for the industry as a whole. A brand new Samsung Galaxy S7 smartphone is estimated to cost the Korean brand $255 to make and package. If we take this as a rough guide to the cost of building a new, albeit high end, phone or tablet device, then we now have something to compare to what it costs someone to own them.

Factors affecting cost to consumers

Some tablets and phones have a normal recommended retail price, and this is what they cost to buy if you want to use an existing SIM card or buy them without a contract. The Galaxy S7, which as we have established, costs $255 to actually make, however, cannot be bought through normal channels as an unlocked or pre-paid SIM phone in most markets, and the price you will pay if you want one depends very much on which network you are with, what tariff you are on with your network, and whether you are a new customer or upgrading from another phone.

Factors affecting cost to businesses

For businesses, there are even more options if they want to get a fleet of S7s (or any other phone) to use within their company. Tablets can be less confusing when it comes to cost to consumer as many people buy them to use on Wi-Fi without a mobile contract, so they do have a normal retail price. However, because a number of businesses use tablets either as tools for their staff or for their customers there are some pricing schemes for contract business users that can vary as wildly as with phones.

If we take a look at the Linx 10, for example, we can also see that tablet manufacturing and retail costs vary depending on the features that are included.  The Link 10 is a basic tablet with a retail price of around $240.  However, a restaurant owner choosing to make use of the Linx 10 and an enclosure for a digital menu will find the 2 USB slots and easy device integration a plus point.  And although the tablet is classed as a basic model, it will be more than suitable for those businesses who are planning on using tablets for customer interaction.

The lower cost of tablets and phones has made it easier than ever for businesses to purchase them to use for both marketing and as part of their business.  This is why business in all industries are making their use more widespread.

Working out if you’re getting a good deal

Obviously the manufacturing cost doesn’t take into account other things that cost Samsung, Linx and other manufacturers money in bringing that phone or tablet into your hands, like R&D, marketing, logistics and so on. However, the closer what you pay in total over the expected lifespan of the device is, the better the deal. If then, your mobile provider charges you $800 to own the S7 or $240 to own the Linx 10, and on top of that your monthly data and call charges (where applicable), then that is a high mark-up.

The price of network tied devices can vary so hugely that it can be very confusing, and so it pays to have a sense of what the ballpark for the manufacturing costs is so you can assess how good a deal is.