Why are phones so expensive?

Written By Unknown on Rabu, 18 Maret 2015 | 20.01

HTC One M9 will be on sale next week for $1099. Source: Supplied

HTC on Tuesday night announced the pricing of its latest flagship device, the One M9.

It's priced at $1099, $250 more than the company's 2014 flagship device. That's a pretty big difference in just one year.

MORE: HTC One M9 review

It's not just HTC, either. Take a look at the Apple iPhone 6, it now starts at $999, compared to $799 when the iPhone 4s launched in 2011. Samsung's Galaxy Note 4 also has a recommended retail price of $949, $50 more than each of the Galaxy Note devices launched before it.

Expect Samsung's latest Galaxy S6 to be priced around the $1000 mark. Source: AP

While consumers are quick to take stabs at manufacturers' price gouging and the "Australia tax", CEO of Kogan.com and tech retailer Ruslan Kogan, puts the pricing down to two reasons: the tanking Aussie dollars, and manufacturers knowing that consumers will pay more if they get more.

"As more and more people realise the benefits that they can have from technology, their expectation of features keeps improving," Mr Kogan told news.com.au. "Whereas a few years ago people would have thought it was ludicrous to spend $1000 on a smartphone, it's clear that the big tech companies are realising that people are open to the idea today."

He added that people now see devices as something more than just an expense.

"People realise that with a feature-rich device, they are able to stay more connected and informed. It helps them in their jobs, and their personal lives. More and more people are seeing technology as an investment rather than an expense," he said.

However, those reasons don't fly when it comes to price hikes by mobile carriers in recent years.

The cheapest you could get an iPhone 4s when it came out on Telstra in 2011 was $63 a month. That included unlimited text messaging, $550 worth of calls and 1.5GB of data.

And now on Telstra? You're looking at a minimum of $81 a month for the iPhone 6. That only includes 1GB of data too, meaning you get even less value.

For a price, of course. Source: Supplied

Optus has backflipped, too. The iPhone 4S was available for $59 a month on the telco when it came out in 2011, which included 2GB of data, unlimited texts and $750 of calls.

Now, if you want something of similar value, you're looking at $79 a month for unlimited calls and text plus 2.5GB of data.

Vodafone has come to the price hike party as well. In 2011, you could get a 16GB iPhone 4s with unlimited text, 2GB of data and $750 of calls for $59. Now, you're looking to pay $75 a month for an iPhone 6 and unlimited calls and text plus 2GB of data.

Telstra has previously told news.com.au that any increase in price is due to the amount of money the network is investing in its technology, like rolling out 4GX and improving coverage. "In late 2011, we introduced 4G connectivity for our customers and provided the enhanced service for no additional cost," a Telstra spokesperson said. "Since then we have invested billions of dollars to bring the 4G experience to 87 per cent of the Australian population so our customers can enjoy the best coverage, network reliability and consistently faster internet speeds."

Sony Xperia E4 smartphone. Source: Supplied

Luckily for consumers, smaller smartphone companies are looking to take advantage of the high prices charged in the current market. Huawei's Ascend Mate 7 offers no compromises and costs just $699 while Sony's Xperia Z3 Compact retails for the same amount. Or if you're really feeling like something different, Oppo's R5 is Australia's thinnest phone and is just $629.

If you're looking for a great phone at an even cheaper price, you've got options there, too. The OnePlus One has all the features of a high-end phone, but is priced at just $419 if you order through MobiCity. Cheaper again? Kogan's Agora 4G+ is a phone that could be sold for much more, but retails for just $239.

While it might seem like you're forced to pay the big dollars for all the features on a flagship device, it's worth looking around to see what else is on offer.

What do you think about the cost of smartphones? Tell us in the comments section below.

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