Saturday, July 5, 2008

Why Does A Mobile Phone Charge Cost as Much as a Mobile Phone?

I bought a Nokia mobile phone for £20. The phone was pretty basic by current fashions; but, it does everything I wanted - i.e. it receives text messages from my students to say they can't make the lesson at 9am on a Friday morning. The phone also came with all the necessary accessories such as a mobile phone charger.

A Couple of weeks later, I've lost my phone charger, so I visit Vodaphone and buy a new charger. The thing is that the charger costs £15, only £5 less than the complete package. This is a general principle for accessories - they are relatively more expensive than buying a new phone.

Why is the Phone only a little more expensive than a Charger.

  • The phone was cheap to start off with; it was an end of line product. It was probably sold at a discount to make room for new stock.
  • No Choice. A phone without a charger is worthless. Therefore, as long as the charger is cheaper than a complete package, the rational consumer is forced to buy the charger. £15 is better than paying £20.
  • Higher costs involved in storing chargers. Presumably Vodaphone sell a much lower % of chargers than mobile phones. Therefore, they have to keep chargers in stock for longer than phones. To make it worthwhile, they need to charge a higher price to reflect the higher cost of storing the product.
  • Encourage purchase of New Phones. If you realise a charger costs £15, you may think this is probably a good time to upgrade and get a new phone. Rather than wasting £15 on getting my old model working, why not splash out and get the latest model for £50 or £60.
  • Moral of the Story: Don't leave your mobile phone charger in New York. I could have had it posted on, but the cost and inconvenience would probably have been equal to £15.


Anonymous said...

Thats not quite the whole picture either. Networks also provide subsidies on PAYG handsets, so the price you pay for the phone its not the true cost as per se.

Tejvan Pettinger said...

Good point. thanks

Anonymous said...

Crazy talk...

Phone chargers does not cost so much and there are plenty of them for each phone user, because every time when you buy new phone, you get new charger. I for example have 3 Nokia chargers, but need only one, can sell for 5 EUR or less. :)

Jude James said...

That is a marketing strategy. In my company we make a lot of money from remote controls to the TVs that we sell. It's done that way. Phones have become so competitive just like TV so they have to find new revenue.