From TV to iPhone: What’s Behind The Tech Price Increase


Using Zoom, communicating via Skype, and watching Netflix have led to a steady increase in the demand for electronic gadgets and TVs since 2019. At the same time, prices are going up due to a global shortage of microchips. Do manufacturers have no other choice but to increase prices? Let’s figure it out.

Based on the statistics:

  • According to research by NPD Group, prices for Smart TV models have increased by about 30% in recent months compared to the same period last year.

  • The research director of Forrester Research said that by the end of 2021, prices for smartphones and other gadgets are expected to increase by about 10%. And by 2022 — even more.

Several manufacturers have already noted potential price increases:

  • Asus, a Taiwanese computer maker, said back in March that a component shortage could drive prices up even further.

  • Sony told analysts that the PlayStation 5 will remain in short supply until 2022 due to the crisis.

  • Sonos has already raised prices. Now they’re asking consumers to pay $100 more for some of their devices.

In addition to rising prices, due to a shortage of microchips, manufacturers also suffer from supply delays. Apple and Samsung have previously warned about this.

For some consumers who ordered the new Galaxy Z Fold3 and Galaxy Z Flip3 smartphones from the Samsung online store, the delivery was delayed by a week or more. Apple had said that the constraints would likely impact the iPhone and iPad tablets in the third quarter.

A price increase or slow shipments won’t be the only options available to manufacturers in 2022.

Another way to maintain sales levels is to:

  1. Change the pricing strategy.

Make more expensive and more profitable products a bargain to buyers. Creating this offer requires presenting three levels of pricing, “good – excellent – best”.

Pricing experts describe this as the Goldilocks effect. Goldilocks didn’t want her porridge to be too hot or too cold. And, just like in a fairy tale, offering three pricing tiers will lead buyers away from the cheapest option. And most likely, the buyer will choose the average product.

It’s working for Apple. After raising the price of its full-size phone by $100 last year, Apple has left prices for the iPhone 13 unchanged this year. They also unveiled a new top-of-the-line option: the $1,599 iPhone 13 Pro Max. This is the most expensive iPhone ever, and compared to its background, the price tags of other smartphones of the company look acceptable.

  1. Get rid of discounts.

Monoprice, another electronics retailer, was also short of components. Monoprice’s vice president says the company will not raise prices but may cancel discounts and other promotions.

  1. Modify the product itself.

As an example, PC makers have been able to avoid a drop in sales by selling devices with less memory and at the same price. Other electronics manufacturers may even redesign their PCBs to reduce the number of components required. This is the case with Sony’s recently redesigned PlayStation 5.

Experts at ABC Assembly will always recommend ways to upgrade your products and minimize the negative impacts of the global shortage of microchips.