How Much Is Too Much for a Smartphone?
Remember when a $1,000 iPhone was considered eye-popping? That all seems rather quaint now. Apple and Samsung both began breaching four digits in 2017 in the U.S. market.
Six years later, they both have several models and varying memory configurations priced at that level, and they aren’t alone. Google has four configurations of its latest Pixel smartphone priced at $999 and higher. Samsung and Google are even beginning to flirt with the $2,000 range with devices that feature foldable displays.
The most expensive phone in Samsung’s lineup—the Galaxy Z Fold5 with 1 terabyte of memory—will set you back $2,159 before taxes. Not everyone pays those prices, of course. Smartphone makers and wireless carriers have become rather sophisticated with promotions and trade-in credits on older devices that help soften the blow.
But consumers are still shouldering a growing load. According to data from IDC, average smartphone selling prices in the U.S. jumped from $409 in 2016 to $735 last year.
That reflects an average annual gain of 11%—more than three times the rate of inflation in that time. And that figure includes budget phones fetching only a few hundred dollars apiece. The price of Apple’s most expensive iPhone configuration has gone up by $550 between the introduction of the iPhone X in 2017 and the iPhone 14 models released last year.
The reasons why aren’t particularly mysterious. Smartphones are now a mature market with slim growth prospects, which leaves price hikes as one of the few ways that manufacturers can boost their revenue. The smartphone industry logged its first-ever decline in global unit sales in 2017, the same year those $1,000 devices began to surface.
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