The Samsung Galaxy S5 costs around $256 to build

[Scorpus]

The Samsung Galaxy S5, which launched last week in numerous countries around the globe, costs around $256 to manufacture according to a report by market research firm IHS. The handset retails for $660 without a contract, meaning up to 60% of the device's price goes directly to Samsung's profits.

Andrew Rassweiler, an analyst at IHS, says that there's nothing too exciting inside the Galaxy S5 hardware-wise. "There’s no breakthroughs, there’s nothing earth-shattering. It’s really just a continuation of what has come before.”

The most expensive part in the Galaxy S5 is the 5.1-inch 1080p Super AMOLED panel, which IHS estimates costs around $63. Samsung-made LPDDR3 RAM and NAND costs a combined $33, while the heart rate monitor on the rear from Maxium costs just $1.45. It's no surprise to learn that the swipe fingerprint sensor in the Galaxy S5, at a cost of $4, is much cheaper than the iPhone 5s' static fingerprint sensor, which costs an estimated $15.

The bill of materials includes an estimated cost of assembly ($5), but doesn't take into account the cost of engineering, software development, distribution, or marketing. All of these aspects will take a sizable chunk out of the $404 Samsung is left with from each Galaxy S5 sold after hardware costs are taken into account.

In comparison, the iPhone 5S costs an estimated $199 to build, and retails for $649.

Permalink to story.

https://www.techspot.com/news/56398-the-samsung-galaxy-s5-costs-around-256-to-build.html

 

[Raoul Duke]

"It's no surprise to learn that the swipe fingerprint sensor in the Galaxy S5, at a cost of $4, is much cheaper than the iPhone 5s' static fingerprint sensor, which costs an estimated $15."
this is a real relief and game changer for me on a device that costs $660 oh, the savings.

 

[Guest]

All rip offs... buy a used 4s or s3 for $150-$200 and works just the same...

 

[RenGood08]

Wow...really...

 

[Skidmarksdeluxe]

It's no surprise at all. Profit margins on high end devices are always high but for the consumer it's a case of diminishing returns for your buck. Lets face it, high end phones are unnecessary for the vast majority unless you're the type who likes to boast or has money burning a hole.

 

[davislane1]

Supply/demand, folks. Any product sold by a company is usually going to be offered at the highest price that the greatest number of people are willing to pay.

 

[Skidmarksdeluxe]

Supply/demand, folks. Any product sold by a company is usually going to be offered at the highest price that the greatest number of people are willing to pay.

Yeah it's a case of "There are plenty suckers out there who want it so we make it and overcharge". All manufacturers do it.

 

[Guest]

But you have consider the cost of labor and R&D as well as transport. Looking at just the cost of material is short sited

 

[Guest]

Absoutely wrong - a 4S does not do what my moto x. it is light years away tech wise.

 

[Guest]

60% margin calculation is ridiculous. The phone RETAILS for $660, it doesn't give the cost sold to the carrier. The carrier needs their chunk too.

 

[Guest]

Only a sucker takes the pure materials cost and compares it to the selling price, then says the differences goes to profits.

You have to look at labour, manufacturing overhhead (like costs to buy production machines), R&D, marketing, head office, administrative, tax, and about 100 other costs (both direct and indirect). At the end of the day, Samsung probably clear 5-10% per phone.

Financial illiteracy is rampant apparently.

 

[Guest]

It may cost $256 to manufacture the 2nd GS5, but the first one that they had to do the R&D for, prototypes, QA, etc etc would have costed millions.

They'll obviously make money off selling the phones, but you can't forget all the back-end work and infrastructure they had to build up to get to this point.

 

[Guest]

There are 7 reasons to set a price with yours being the most simplistic of all of them.

 

[inverse137]

Wow...really...

No. Not really.

The parts alone are not the full cost of the device. The only person that thinks this phone cost $250 is the one that doesn't own a business.

 

[inverse137]

Absoutely wrong - a 4S does not do what my moto x. it is light years away tech wise.

Not really.

Name 3 things your moto x can do that no other phone can do......

 

[Guest]

The article is misleading and half of the posters here do not have a clue. Shipping, export duties, import duties, variable and fixed asset costs, R&D costs, tooling costs, all of those eat up a significant (if not more than half) of that profit margin.

They do not make a 60% gross margin on the product, that is for certain...

 

[Jad Chaar]

It is interesting how the 5S costs less than the S5. The S5's fingerprint sensor is supposedly a lot quicker to use and more accurate than the S5s yet the phone as a whole costs less. I guess the high end screen drives up the price.

 

[davislane1]

The article is misleading and half of the posters here do not have a clue. Shipping, export duties, import duties, variable and fixed asset costs, R&D costs, tooling costs, all of those eat up a significant (if not more than half) of that profit margin.

They do not make a 60% gross margin on the product, that is for certain...

Discussing the intricate details of product pricing (or anything business-related) on most Internet forums only opens the door for knuckleheads who will exclaim "its all lies!" and "it cant cost that much!" or, my personal favorite, "because they're greedy!" Ergo, its best to simplify things and let commenters rejoice/froth/spasm accordingly. Much more entertainment value than apologetics for expensive toys.

 

[SNGX1275]

The article is misleading and half of the posters here do not have a clue.

I count... possibly 2. Out of now 18 replies. Also, I don't think you read the article, next to last (of a whopping 5 paragraphs, really 4 and 1 line) covers "the cost of engineering, software development, distribution, <and> marketing".

Troll level 3/10, would be 1/10 but you got me to reply.

 

[alitahir]

Shut up and take my money!!

 

[Raoul Duke]

Only a sucker takes the pure materials cost and compares it to the selling price, then says the differences goes to profits.

You have to look at labour, manufacturing overhhead (like costs to buy production machines), R&D, marketing, head office, administrative, tax, and about 100 other costs (both direct and indirect). At the end of the day, Samsung probably clear 5-10% per phone.

Financial illiteracy is rampant apparently.

The article clearly says it costs approx. $256 TO MANUFACTURE. Apparently just plain illiteracy is rampant

 

[Emexrulsier]

I just bought one in the UK including taxes (which I will claim back) it cost £504.00 which in dollars is about $844. Yes it's very expensive but like any technology you pay a premium to get it first. Also it could very well be that 50% is the cost of parts but I bet in reality they are only making $100 a handset in profit.
Always amazes me how people scream and shout when companies make profit, they cry that they are being ripped of but wtf do you expect. Do you want them to design phones, and build factories and machinery that costs several millions then produce the device and then give you it for $50 or better still get it free in a packet of cereal.

 

[RenGood08]

No. Not really.

The parts alone are not the full cost of the device. The only person that thinks this phone cost $250 is the one that doesn't own a business.

It was less of an "Wow...really? I'm being ripped off." I personally understand business. If you expect to make any kind of profit you have to double or triple the manufacturing cost. It is also not supply and demand. It's about being able to keep the business running. The high cost of living is ridiculous these days. I understand the business side of this. Consumers can think what they want. This has to be done in order for businesses to thrive.

 

[Railman]

Actually it is virtually impossible to determine the BOM costs to the penny as they will tend to vary in price. For example a limited production run would bump up the price as you cannot take advantage of bulk purchase discounts. Another example would be unforseen circumstances such as natural disaster affecting production of certain components. There are other factors such as FX rates, taxation, raw material costs, labour costs, transportation costs etc.