Though Samsung posted record earnings that did not meet analysts’ expectations, the company is having no trouble courting consumers to its flagship device.
The Galaxy S4 went on sale in May for $199.99 on a three-year term on most Canadian networks — and around $699.99 outright — but that price recently rose to $229.99. Strangely, the fluctuation came after the device received its first price drop to $149.99 but quickly rose again the $200 mark.
According to Samsung Canada, demand remains high for the device, so the price increase could just be a reflection of supply and demand. It’s not uncommon, too, for high-end devices to rise in price after launch, which usually coincides with a special honeymoon price. This $30 increase could be permanent, and is likely a reflection of the high customer acquisition costs and large upfront inventory expenditures. The Galaxy S4 is certainly Samsung’s most technologically-advanced smartphone and costs more for network providers to purchase than their previous high-end models.
Another theory, though unconfirmed, pertains to carriers introducing higher contract prices on all their devices as a way to acclimatize users to the impending price increases that will come from the enforcement of two-year terms in December with the introduction of the Wireless Code of Conduct.
One must take into account the smaller delta between upfront and outright price in a scenario like this. Because the outright price of $699.99 has not changed, one is actually closer to paying off that difference in the event of account cancellation. With the impending elimination of early cancellation fees, carriers are asking customers to deposit a larger down payment towards the price of the phone. Once the Wireless Code comes into effect, we’ll be seeing a lot more of this in the marketplace.
