The iPhone 12 series is the latest range of smartphones from Apple for its millions of fans and non fans. And typical of Apple, the starting prices of the iPhone 12 are insanely expensive, especially in the Nigerian market (same with other Africa countries).
But, the starting price of the iPhone 12 for its lowest 64GB storage variant is about 510,000 Naira in Nigeria. If you have allowed the thought of buying an iPhone 12 in Nigeria with half a million in Nigeria to sink in then you can now continue reading as there is a twist to this.
A new teardown video however reveals that the bill of materials (BOM), or the total cost of the inside components of the iPhone 12 is about $373, which is just about 142,000 Naira. Why then is the iPhone 12 price in Nigeria as more than three times it’s production cost? Why does the iPhone 12 cost half a million in Nigeria? Let’s get to the facts.
To begin, let us help you with this BOM breakdown, undertaken by Japanеsе teardown experts Fomalhaut Techno Solutions, reported by Asia Nikkei.
The experts estimated the Qualcomm X55 5G modem at $90, Samsung OLED display at $70, Apple A14 Bionic chipset at $40, flash memory at $19.2, RAM at $12.8, Sony’s camera sensors at around $7.9, and so on. This brings the total cost of all components, as mentioned, to around $373 or about 142,000 Naira. This is significantly less when compared to its retail price that starts at 510,000 Naira.
Why is the iPhone 12 Sold at 510,000 Naira?
1. Custom Duty Charge
What is missing from the picture are all the hidden costs that add up to make the iPhone 12 as expensive as it is in Nigeria. Let’s start off with the most obvious one – custom duty charge.
The manufacturing and assembling of the iPhone 12 components take place outside Nigeria. And if you are very familiar with Nigeria customs duty charge, you’ll understand how expensive it’ll be to import the iPhone 12 into the country. If iPhone 12 was been manufactured and/or been assembled in Nigeria, the price would have been very less.
The above factor leads to increase in price. Take the United States for example, the iPhone 12 is priced at $830 in there, which is about 315,815 Naira. Even if you add 6-8 percent sales tax, it is still relatively affordable compared to the Nigeria price tag of 510,000 Naira. But there is actually more that contributes to the increase in price. So, what else?
2. Research and Development efforts
Apple is well known as a smartphone company that designs and manufactures its own chipsets and panels. It makes smartphones that tens of millions of customers/fans buy every year.
This translate to the necessity for the tech company to set a standard in the global market with every upgrade. To achieve this, Apple invests billions of dollars every year into research and development (R&D) to keep up with the trends and to incorporate the most advanced technology in their smartphones.
This investment into R&D is the reason why; One, your Face ID works seamlessly (almost all the time, at least). Two, why Apple’s chips are some of the most powerful in the market. And three why the iPhone runs very fast and smooth despite having lower RAM than its Android flagship phones. These small incorporations go a long way in making the smartphone as efficient as possible.
3. Marketing and Advertising cost
Apple is a worldwide technology brand with billions of fans and customers. It has to reach billions of potential customers all over the world. And that’s why a large portion of its spendings goes into marketing and advertising the iPhone 12. While it’s true that other tech companies does marketing, but Apple always has a way of always going overboard with its marketing and advertising campaigns.
So you can see that the price for each unit if iPhone 12 also include several billion dollars spent in marketing and advertising by Apple. This is a better reason for price increase.
4. After-sales Services and Repairs
Next up is after-sales service and updates. Apple is known for its good service, which can be seen in its policies including international warranty, easy phone replacement options, skilled technical help at retail stores, quick turnaround time, and more. With several awards, it is clear that Apple is one of the frontrunners when it comes to offering top-notch after-sales service to customers.
5. Continuous Software Updates
You’ll also be getting years of software updates to keep your iPhone up to date. Your iPhone doesn’t feel old for a very long time as you’ll be getting OS updates for up to about 5 years. They spend millions of dollars to make these updates available someone has to pay for these updates right?
Once again, even these are hidden costs that is eventually transferred onto the end-user. Setting up massive stores, hiring the best talent and developing new software updates for five years takes a lot of spending, which is then added to the final price of the iPhone 12.
6. Profit Making
If Apple is not making profits then there won’t be investors. While the shareholders might not be of direct concern to Nigerians, but these investors also needs to make money. Remember that Apple is the world’s first $2 billion company which means there are millions of investors who wish to make wealth from the brand.
Making steady profits and massive revenue is key to Apple to stay too of the game. This way, everyone is happy (Apple and investors) while end users are the ones not so happy with high prices of iPhones.
If you are looking for a small luxury then you should look the way of the Apple iPhone 12. In fact, the iPhone 12 is one of the most expensive mainstream phones you can buy in Nigeria.
Although it’s very expensive, the Research and Development, good marketing and advertising strategy have helped Apple become arguably the most premium device personnel in Nigeria smartphone market.
Although the possible production price of the iPhone 12 is three times less than the selling price, customers continue to buy it. The Apple charm is working magic every time it’s used on consumers.