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Todays smartphones are pretty powerful devices, and theyre pretty expensive as well. Even without considering foldable phones, a single premium flagship can easily cost above $1,100. Weve actually become so used to such high numbers that the only times we get irked is when theyre almost double that, as demonstrated by foldable phones like the Samsung Galaxy Z Fold. But is that really the price of making a smartphone?What goes into building a smartphone anyway? Is it just a matter of buying components and slapping them together in a factory en masse? Do the build costs match the retail prices that companies practically force on consumers? More importantly, how much would it really cost to build your dream phone? Fortunately for us, some people actually tried to answer that as well.Designer: Shea (Concept Central) x MKBHDNothing Comes from Something: MKBHDs Dream PhoneWe all probably have complaints even about our favorite phone brands and models. It might have a design quirk we dont like, a feature were missing, or a piece of hardware we wish were there. At one point or another, weve all wished we could make our phones, just like how some people assemble their own desktop computers. Of course, the Internet is also full of people who do try to make their dream mobile device, but few end up looking as sleek as commercial products.Perhaps it was just for fun, and definitely for some publicity, but Nothing asked the famed Marquees Brownlee, better known as MKBHD, what his dream phone would be. But more than just asking him for specs and features, the young design-centric brand also challenged itself to research and share how much it would actually cost to make that dream phone. The answers were both telling and a little bit shocking.Simply focusing on the bill of materials or the actual cost of components that go into the phone, Nothing reached what at first looked like an acceptable figure. The prices came from Nothings own experience dealing with suppliers, though you can expect some intentional margins of error. After all, many of those prices are confidential, but they do give us ballpark figures to work with.Battery 6,000mAh $13Screen: 6.1-inch 120Hz AMOLED 1440p $35Cameras: 4 rear, 1 front $80Storage: 1TB UFS 4.0, 16GB LPDDR5X RAM $90CPU: Qualcomm Snapdragon 8 Elite $190Electronics: Motherboard, antennas, speakers, etc. $15Packaging: $30Design materials: decorations, back glass panel $8Structural parts: screws, vapor chamber, mid-frame, buttons $10Patent Licensing $29Thats a grand total of $500, which actually sounds pretty cheap when you consider that these are specs that match Samsungs and Apples top phones. Its an even more surprising figure when you think how the Galaxy S25 and iPhone 16 might have some of that same hardware and still cost twice as much in retail. A phones BOM might make phone prices look ridiculous and unfair but, unfortunately, theres more to the story than just a shopping list of parts.Hidden Costs, Invisible ValueWhen we cook food ourselves, we often only think about the cost of the ingredients. The same goes for assembling a desktop computer from parts we bought ourselves off shelves or over the Internet. Its a completely different case, however, if were making something for others, especially if they have to be mass-produced. Then we have to take into consideration the costs for things that dont go directly into cooking the food but also the preparation for it and even the tools that we use.One of the biggest hidden costs often cited in making products is R&D, short for Research and Development. It can refer to almost any ancillary activity or expense related to designing a product, but in this particular case, it refers to things like designing the motherboard that changes almost every year, the actual factory costs for both prototypes and final products, as well as the salaries of all the people involved.Images courtesy of: iFixitBy Nothings standards alone, R&D can amount to no less than $20 million, a staggering figure that no consumer will ever pay for. Of course, this cost is split across the devices, so buyers only get a small portion of that. Nonetheless, its quite a shocking number, especially if you take into account that giants like Samsung and Apple have even bigger expenses when it comes to R&D.It might be too easy to write this off as an unnecessary expenditure, but imagine what would happen if a phones circuit boards werent properly designed and tested for the latest and greatest processors? Or if shipping was contracted to a cheap but unreliable carrier? These are the details we often overlook when considering the total cost of building a phone, but these are the very details that could make or break a company perhaps even more than the bill of materials.Margins, Scales, and Industry CloutA smartphone manufacturer, after all, isnt a charity organization. It will always be driven by profits, so it will need to make sure theres a decent margin between build costs and retail price. Of course, that profit margin isnt going to be the same for every company, and it is partly determined by how long youve been in that industry and how much supply chain companies actually trust you.As Nothings Carl Pei pointed out, you will get different component and service prices from suppliers if youre new to the market or if youre a well-established brand like Apple. When negotiating with these suppliers, you might even have to pay an additional premium of around 15% because they might not trust you yet. Conversely, if youre a reputable brand, you might be able to get away with delaying payment by a few months, not to mention getting cheaper prices. Manufacturers will also charge more for less popular designs since demand for them will be lower.As recent figures show, bigger companies like Apple, Google, and Samsung impose a bigger profit margin, but thats only when comparing it against production costs based on the bill of materials. The companies also spend more on R&D, advertising, and licensing fees, so actual margins can be quite smaller than indicated. Either way, the full price youre paying isnt just the total of the components but everything that goes into making a phone, directly or indirectly. Its a very clear case that the whole is more than a sum of its parts and definitely costs more than that.Design MattersSo the actual cost of making a phone is made up of both the visible and the invisible. Its not that hard these days to glean the bill of materials from teardowns and industry connections, but the actual costs of R&D, design, logistics, and marketing are harder to figure out. MKBHDs phone might only cost $500 if you take into account its parts, but you cant really build a phone the way you build LEGOs unless you actually build them that way.Designer: FairphoneAn important takeaway here is how much design is actually involved in making a phone and, in the vein, also how much it costs. To some extent, it also helps explain why its harder for companies to immediately adopt more modular components and repairable designs because it drives the costs up considerably as well, costs that will be pushed down to consumers. That said, the industry as a whole is thankfully moving in that direction, which hopefully means that we can someday have that ideal smartphone design that will not only let us assemble our own but also repair them more easily.The post How Much Does It Really Cost To Build a Phone: Specs, Design, and Hidden Costs first appeared on Yanko Design.
