Samsung’s Galaxy S5 Costs About $256 to Build

[Puppet]

What import fucking taxes?24% VAT,that's all.

 

You don't have import taxes in Romania?

 

Edit: Just looked it up, apparently you don't on electronic goods.

 

This is kind of awesome, you could probably make some money selling grey market goods into the EU. I take it you will pay full VAT when importing though?

 

Probably doesn't work out that great, but still better than the UK. 

[rmonty]

All the cost comes from the R&D

[.:MARK:.]

Yeah this always happens when phones are made, people don't realise the costs involved with R&D and other stuff, and the components don't just magically exist, they have to be built and that has immense costs. And its likely that the huge profit made will go towards R&D of the S6.

[SangeetKhatri]

I am not trolling or joking, it's legitimately a problem. The note 2 doesn't have that problem because it doesn't use amoled I think and the S4 however does and has burn in problems (except the s4 active and maybe some other models that use a regular lcd)

 

What the hell are you talking about? Note 2 uses an AMOLED screen. http://www.gsmarena.com/samsung_galaxy_note_ii_n7100-4854.php

[SangeetKhatri]

1. Marketing (Ads, Press Conferences, Events, Hoardings, Booths in malls and where not, it all costs money)

2. Labour and Production costs. Not to mention the training costs for new labours. Employees Sallary and all the production forces working behind to make phones possible.

3. License costs for Google Play Services, Additional subscriptions and for some bloat softwares.

4. Research and Development : AMOLED displays took a lot of R&D to come to where they currently are. Few years ago, Samsung were unable to produce even AMOLEDs of retina PPI. This is where R&D came into factor. Also this applies for lots of other stuff.

5. Shipping and Transporting charges.

 

6. They also have to make some profit, so after all this they barely get about 25-30% of the profit which I believe is well worth for keeping the company alive and bringing more devices to the market.

[s3ns3]

6. They also have to make some profit, so after all this they barely get about 25-30% of the profit which I believe is well worth for keeping the company alive and bringing more devices to the market.

WHAT ? 25-30% ?? dude all those points you posted are adding like 100$ x phone .why do you think the s4 cost almost half the price now than it had when released

[flibberdipper]

Wow... That's a lot of money, but I guess to a big company like them, rolling out several million of those bad boys wouldn't be that big of a deal.

[schwat]

ITT: People who have no idea about the actual costs of designing and manufacturing electronics.

 

Go ahead and open up your own company where you sell phones at cost and don't pay anything besides the cost of materials. Tell me how that works out for you.

[Misanthrope]

Yeah and adding a "metal" body will increase that 50 bucks at most, making the M8 just as big of a rip off

[Victorious Secret]

Maybe people have blinders on, but go look at what smartphones cost off contract back then. 

 

Shit hasn't really changed. If anything, its gotten better w.r.t to inflation.

[SangeetKhatri]

WHAT ? 25-30% ?? dude all those points you posted are adding like 100$ x phone .why do you think the s4 cost almost half the price now than it had when released

S4 launched for about $600 unlocked, now it is selling for $400-$450. They are just cutting on their profit margins because they want to empty the stock of S4 because after a year, no one would buy it anyways because it would be outdated by the time.

Do you guys really think that if Samsung did not had some profit margins then they would still be as big of a company as it is today. Assets of Samsung are already more than some countries. They have to make profit to keep their company alive and growing. And this is not called greed as other people are calling, it is called running a business and the main two things of running a business is to 1. Make Profits and 2. Expand Business and I can see that Samsung is doing that exceptionally well.

[piggykid1]

Target already released 99.99 with a new 2 year contract I thought those usually happen a little while after the release, but I guess not now.

[Misanthrope]

1. Marketing (Ads, Press Conferences, Events, Hoardings, Booths in malls and where not, it all costs money)

2. Labour and Production costs. Not to mention the training costs for new labours. Employees Sallary and all the production forces working behind to make phones possible.

3. License costs for Google Play Services, Additional subscriptions and for some bloat softwares.

4. Research and Development : AMOLED displays took a lot of R&D to come to where they currently are. Few years ago, Samsung were unable to produce even AMOLEDs of retina PPI. This is where R&D came into factor. Also this applies for lots of other stuff.

5. Shipping and Transporting charges.

 

6. They also have to make some profit, so after all this they barely get about 25-30% of the profit which I believe is well worth for keeping the company alive and bringing more devices to the market.

 

1. Marketing costs shouldn't be transferred to consumers they should be absorbed by a Company's margins so it's not a valid excuse

2. Labour? I'm surprise you would say this considering how most employees creating any tech nowadays are literally jumping out of the fucking windows.

3. Very, very big misconception here: Google actually shares add revenue from the android devices with this companies and charges nothing to use android. It's their entire "less than free" approach that has made em this big. Samsung would be getting money from Google for each unit sold, that's why they had that beef about all the custom apps Samsung ships with, Google probably said they would no longer just share profits if they kept undermining google apps which is the entire point of google giving away the OS

4. R&D is only partially true. For other companies it would be, but Samsung is a lot more than just an end user product manufacturer, they actually see a lot of revenue from selling technology and even manufacturing of parts like screens and such so they actually wouldn't take a hit on R&D: They can finance those costs by selling the tech (or even parts) to others and still get to keep using that tech themselves as well.

5. Shipping and transporting can't be helped though on a large scale it would come up as 2 or 3 bucks per phone you're overstating it

6. They're not making just "some profit" they're making almost nothing but profit  

[schwat]

<snip>

 

And we're supposed to be angry at a company for turning a profit? Nobody is forcing you to buy the latest and greatest smart phone. 

 

Seriously, most of you guys don't have any idea about what goes into manufacturing electronics. That price of $256 is for the bill of materials. That is literally the cost of the raw materials. It doesn't include overhead for part storage, R&D, prototyping, V&V testing, manufacturing, post manufacturing functionality testing, developing software, licensing software, environmental & safety testing, electromagnetic compliance testing, import/export classification setup, UL testing, marketing, shipping, etc.  I could keep going. 

 

It is expensive to design and manufacture things, especially things that are using new technology. If they are too expensive, don't buy them. 

[Misanthrope]

And we're supposed to be angry at a company for turning a profit?  

 

Angry? Nope. Justifying their overpricing with lame rationalizations? Again not really, let's just call a spade a spade. They charge way too fucking much for the phones, that's well within their rights and that certainly not the worst company that does this (Apple charges as much or more for much worst hardware). There's no need to try to say "oh but they had to spend so much on this and that, consider x and y" The phones are expensive, it is what it is if people want to buy em that's their problem.

[schwat]

Angry? Nope. Justifying their overpricing with lame rationalizations? Again not really, let's just call a spade a spade. 

 

If you think there is any other consumer item you purchase that has much lower profit margins then you are misleading yourself. $600 for a goddamned pocket computer that happens to make phone calls is hardly overpriced. 

[Legion]

R&D, Shipping , Marketing,Software Development, Labour. They still make a good profit just like any enthusiast/status tech otherwise you just aren't going to do it.

[Misanthrope]

If you think there is any other consumer item you purchase that has much lower profit margins then you are misleading yourself. $600 for a goddamned pocket computer that happens to make phone calls is hardly overpriced. 

 

It is when 300 can buy you one that's just as fucking good but lacks useless features like stupidly high pixel density or gimmicks like barely working heart rate monitors.

[s3ns3]

Seriously, most of you guys don't have any idea about what goes into manufacturing electronics. That price of $256 is for the bill of materials. That is literally the cost of the raw materials

its not not the cost of raw materials loool.the total cost of components includes manufacturing. the parts thats arrives to samsungs assembly units(other companies does that for samsung too anyways,and not just for phones) are with price x item which includes manufacturing(labor , even rejects loss and quality control ofc) then assembly unit charge a few dollars x unit assembled. i know this 100% i worked for 2 months in a factory that makes parts for samsung and some assembly. we had a few meetings about quality control,in which we were told exactly how much does a part cost.and that price includes everything,ready to leave the factory. lol again at raw materials thing

[schwat]

its not not the cost of raw materials loool.the total cost of components includes manufacturing. the parts thats arrives to samsungs assembly units(other companies does that for samsung too anyways,and not just for phones) are with price x item which includes manufacturing(labor , even rejects loss and quality control ofc) then assembly unit charge a few dollars x unit assembled. i know this 100% i worked for 2 months in a factory that makes parts for samsung and some assembly. we had a few meetings about quality control,in which we were told exactly how much does a part cost.and that price includes everything,ready to leave the factory. lol again at raw materials thing

 

If you read the article someone tore down the phone and based the $256 price on the cost of components on the BOM and an estimated $5 cost to assemble. That still does not include any of the other costs associated with actually producing a product. Samsung never said this phone costs them $256 to make. 

 

You can read the actual article from the company that did the teardown here:

 

http://press.ihs.com/press-release/design-supply-chain/samsung-galaxy-s5-carries-astronomical-bill-materials-ihs-teardown

 

And here's the table showing the cost breakdown:

 

 

And even if it DID cost Samsung only $256 total to make each phone, you're not buying the phone from Samsung. You're buying it from a retailer who also has to make a profit. Everyone in this thread acts like making a profit off something you produce is somehow morally wrong. 

[SangeetKhatri]

It is when 300 can buy you one that's just as fucking good but lacks useless features like stupidly high pixel density or gimmicks like barely working heart rate monitors.

 

If you don't like the phone, then you don't have to buy it. As simple as that. Only buy the phone that you want to. Let the companies do their work. The Galaxy S5 still costs the same as the S4 did at launch, so after a year, I would not mind a better hardware and a better display and some more things for the same price.

That being said, again if you don't like it then you can just simply ignore it. Maybe it has no meaning for you, but maybe someone would find that device worth the price and he would go and buy it.

[Misanthrope]

If you don't like the phone, then you don't have to buy it.

 

And that's what I just fucking said a few posts ago. It doesn't means that I shouldn't criticize it, so don't come to me with a pathetic argument like "don't like it, don't buy it"

[Scheer]

Its common for retail to mark up items 60% over what they paid for them, and the manufacture likely marked up 60% over what it cost them to build it for, so Samsung is screwing you less than Walmart is...

Material cost for a pair of $200 Buckle jeans is what, $5?

 

I feel one of the big reasons Nexus phones are cheap is the company who is bidding to make the phone for them has already done the R&D for the technology to put in other phones, so they don't have to figure that into the cost on their bid.

[SangeetKhatri]

As long as they make decent phones, then they have all the right to make the profit. They have invested money and they are ought to make profit from it.

Samsung was basically an appliance manufacturer but they made profit and now have expanded into virtually anything you could think of. They have expanded so much only and only because of the profits they make.

So, they are not being greedy, they are doing business, making profits and growing their company and this is what any company should do and this is what all companies do. This is what every phone manufacturer does.

I have a little bias towards Samsung and it is because they provide every basic thing that a phone should have. They have expandable storage across all their devices from the very lower end to the high end, they have removable batteries which is a very nice addition for Android phones as they hog batteries so much. They still have FM Radio in their smartphones which is appreciated by the audience here at India. They have dual sim version of almost every mid range phone for just a little extra which is a big reason why the India crowd prefers Samsung. The reason why they are so successful is because there are no real deal breakers in Samsung smartphones and they provide every sort of freedom one would need with a smartphone. They believe that if a feature phone can have those features, then a high end phone should definitely have it.

Now turn back to someone like HTC who are reporting Loss every quarter. They don't have expandable storage on most of their phones which is a deal breaker for almost everyone in a country like India and China where most of the smartphone sales happen because India and China combines make up for 1/4th of the world population. Alarming but true. HTC on the other hand advertises cloud storage but looking at the poor condition of Internet in India with the average Internet speed just 1 Megabit per second, cloud storage or anything cloud based is virtually a no go. They don't have FM which by the way even a $20 phone has. The build quality of HTC is excellent but there are enough deal breakers already to make people especially in India and China to avoid buying their phones. They now seems to have added the SD card but some things still are there as deal breakers (4 Megapixel camera anyone?)

[LAwLz]

As long as they make decent phones, then they have all the right to make the profit. They have invested money and they are ought to make profit from it.

Samsung was basically an appliance manufacturer but they made profit and now have expanded into virtually anything you could think of. They have expanded so much only and only because of the profits they make.

So, they are not being greedy, they are doing business, making profits and growing their company and this is what any company should do and this is what all companies do. This is what every phone manufacturer does.

I don't think anyone is saying they shouldn't make a profit, and I don't think anyone is saying they should stop "doing business".

The Galaxy S 5, HTC M8, iPhone and pretty much all other flagship devices are overpriced though. They could drop like 200 dollars in price and the manufacturers would still make a healthy profit.

Not saying that they should from a business POV but they should from a consumer POV. The Nexus 5 is a great example of how cheap a high end phone could be.