Why identical Samsung Galaxy S9s vary in price
It depends on the carrier — and how loyal you are
Hey, how come this other person is paying less than I am?
It is an apt question to ask if you plan to buy either of Samsung’s new flagship phones, the Galaxy S9 or the Galaxy S9+, that hit stores this past Friday.
While there always has been some pricing variation depending on whether you buy a smartphone from a given carrier, retailer or the manufacturer itself, not to mention the various sweeteners and trade-ins that may impact your outof-pocket costs, it appears the dollar gap from one outlet to another is wider with Samsung’s latest handsets.
The $80 price gap
Let’s start in the high-rent district: The full prices for the S9 and S9+ are, respectively, $799.99 and $929.99 at Verizon, $792 and $912 at Sprint and
$789.99 and $914.99 at AT&T.
At Best Buy and Amazon.com, however, these same phones cost $719.99 and $839.99, similar to the $720 and
$840 price that T-Mobile is charging as the only one of the four major carriers to play cheap here, at least in what you’ll pay upfront.
The rub is that Samsung itself is charging just $719.99 and $839.99, which might suggest that it is undercutting some of its carrier partners.
Since the phones are unlocked, you as a consumer can hook up with any wireless carrier of your choosing, after you make your purchase.
Do the math, and the disparity between the most and least you’d pay for either phone is $90 for the S9+ model and $80 for the Galaxy S9. That’s nothing to sniff at.
There are a few factors to explain why this is happening. Most of you don’t pay for a phone in one big chunk, opting instead to surrender monthly payments where the pricing discrepancy from one carrier or retailer to the next is more negligible, and the hit on your personal budget is more manageable. And you may not even notice any big disparity if the pricing is broken down on a monthly basis.
“In a way, carriers are no different than loan or credit-card companies,” says Carolina Milanese, a consumer tech analyst with Creative Strategies. “They are benefiting from our desire to have something new we could not otherwise afford.”
Also, most consumers still tend to buy new phones from their carrier even if they do charge more, perhaps a holdover from the era when the wireless providers subsidized the device price in order to lock you into what was typically a two-year service contract, with harsh financial penalties if you wanted to bail early.
Nowadays, you finance or buy the phone separately, then pay for service on top of that. And you’re likely to start off at the AT&T, Verizon or Sprint store, as usual. That’s why these stores keep sprouting up in strip malls — and are often packed.
T-Mobile has made a name for itself by bucking its industry rivals, so it’s not a huge surprise that it is undercutting the other carriers with lower upfront pricing.
Its rivals are playing a different and more expensive game, at least at the outset.
“There is, I am sure, some confidence (by the carriers) in the fact that consumers do not shop around as they do for other things,” Milanesi notes.
Samsung wants brand loyalty
Samsung’s own role here is interesting. Roger Entner, the founder and lead analyst of Recon Analytics, believes Samsung is borrowing a page from Apple’s playbook with the iPhone, in that they’re charging carriers that same price as consumers in a bid for their loyalty.
“That means Samsung makes its regular profit on the device with an estimated Bill of Materials of around $300, (giving the company) roughly a 60% profit margin,” Entner says. “As a side benefit, Samsung strengthens its customer relationship by cutting out the carrier as the middle man.”
Samsung told USA TODAY that it lists all the unlocked phones on Samsung.com at the recommended retail price, then leaves it to carrier and retail partners to independently decide a final price on their own, which is evident given the price disparity.
“It’s a fair observation that the land- scape changed a bit,” says Sprint’s senior vice president for marketing Allan Samson, who says Samsung has raised prices over last year’s handsets.
Samson believes Samsung would love to see all four national U.S. carriers forgo a little margin and sell at the same price that they’re selling direct to consumers. But he points out that Samsung doesn’t have the same financing costs, consumer debt risks or overhead that a carrier has.
That of course isn’t the consumer’s problem, so why should you pay more? Sprint’s strategy, according to Samson, is typical of any company that buys a product wholesale from a supplier. It has to charge more to cover other costs.
“You have a little bit of margin in that. And that margin allows you lots of things: allows you to finance, allows you to do promotions, allows you to offer … an included annual upgrade. You look at a suite of benefits and you say, ‘ What’s the fair price to offer something so that you can include all of these benefits?’ ”
How to decide
As a potential buyer you need to consider the “total cost of ownership” of your new phone, not least of which is what you will pay for your (presumably) unlimited wireless service plan.
You’ll also want to pay attention as the carriers try to one-up one another with two-for-one deals or other promotions. The buy-one-get-one-free phone deals all sound swell, but you best be comfortable with the carrier offering it, since you’ll in all likelihood need to add a second line with that carrier.
Trade-in rebates also vary from place to place, and pay attention not only to the dollar amount, which varies by the condition of the phone you’re trading in, but also the type of rebate you receive. It may come in a store credit or a gift card.
If you choose to go with monthly financing, you’ll also want to closely inspect the terms of that deal.
What kind of flexibility will you have in a year, say, should next year’s Galaxy or someone else’s handset strike your fancy?
And also figure out over what length you are paying off that phone, from 24 months to 30 months, or something else.