Is the Pixel 8 overpriced? We did the math

I’m fairly certain your jaw dropped when the Pixel 8 and eight Professional‘s official costs have been revealed earlier at the moment, much more so if you happen to reside exterior the USA. The US pricing for each Pixels has jumped up by $100, placing it nearer to its more durable Galaxy and iPhone competitors. However the sticker shock is much more essential exterior the US, the place costs have been bumped up by as much as €200 or £150. So what offers?

I took my calculator, made a spreadsheet, and tried to make sense of these mad numbers. My authentic thought was to show that the remainder of the world was being stiffed with the brand new Pixel pricing — a €200 or £150 bounce doesn’t appear as truthful as a $100 enhance — however I ended up discovering a logical rationalization for all of it.

The tl;dr model? Google took a giant a part of the monetary hit final yr and has now readjusted (with out over-correcting). You may largely blame inflation charges for the Pixel 8 and eight Professional’s value will increase within the US; whereas the remainder of the world can level its fingers at weaker conversion charges.

You will discover the mathematics beneath. And please, remember the fact that I’m not excusing Google for its greater costs, however laying out a monetary motive for them. Whether or not that justifies the rise for you otherwise you favor if Google stored a extra aggressive value is your prerogative. I’d favor extra aggressive pricing.

In 2021, the Pixel 6 price $599 on launch, whereas the Pixel 6 Professional was priced at $899. These costs remained the identical in 2022, regardless of a >5% year-on-year inflation fee within the US on all items. With out even doing the mathematics, it’s straightforward to inform that Google was sacrificing some income there to maintain that an identical value.

The story is totally different in 2023, with Google upping the value of every cellphone by $100. The inflation fee is just round 3%, although, so why the sudden enhance? Effectively, that solely is sensible whenever you cumulate each years’ charges (9.7%).

I took the bottom 2021 value for every cellphone ($599 and $899, respectively), and added the year-on-year inflation fee for the months of August. (Pixels are introduced in early October and the newest US inflation report out there then is for August.) You may see the ends in the desk beneath.

Based mostly on this, the Pixel 7 and seven Professional ought to’ve price $633 and $951 — definitely greater than their official MSRP, which is why I stated Google took the hit final yr. The mathematics says the Pixel 8 and eight Professional ought to price $657 and $986, respectively, which is fairly near the $699 and $999 official pricing. The markup is greater on the bottom mannequin, nevertheless it’s fairly spot-on for the Professional.

After we requested about these greater costs, Google clearly didn’t point out inflation, however targeted as an alternative on all of the {hardware} and software program updates to the Pixel expertise that this eighth collection is bringing. In accordance with the corporate, the markup is justified by the refined designs and supplies, upgraded digital camera lenses, brighter and higher shows, Tensor G3 processor, together with all the brand new AI capabilities, and particularly with the main replace coverage of seven years. Promising to assist a cellphone for 3 extra years comes with a variety of growth prices that needed to be factored in one way or the other.

Since I reside in France, I additionally care about the remainder of the world (ROW) value of the Pixel 8 and eight Professional. I’d already advisable these telephones to a number of associates, hoping for a aggressive value and a neat pre-order bonus, however I wasn’t anticipating such an essential markup. The Pixel 8 is €150 dearer than the Pixel 7 right here, and the 8 Professional is €200 greater than the 7 Professional. Yikes.

Right here too my trusty calculator and spreadsheet gave me a logical motive. I targeted on the value in euros, kilos, Australian {dollars}, and Canadian {dollars} (I feel an identical development shall be discovered throughout extra international locations and currencies). I discovered the conversion fee of every foreign money versus the USD on the date of the cellphone’s announcement, and I calculated how a lot every cellphone price in equal USD in these markets. You may test the unique spreadsheet if you would like, however the extra fascinating bits might be seen within the graphs beneath.

For the Pixel 6, 7, and eight, a development rapidly appeared. Greenback for greenback, the Pixel 6 was ~20-30% dearer in euros, kilos, and Australian {dollars} (all these costs embrace gross sales tax, which explains the big distinction) and ~8% dearer in Canadian {dollars}. When you think about delivery, totally different import/export charges, and easily eager to spherical up the quantity, all of it is sensible.

That wasn’t the case with the Pixel 7. Google took successful in 2022, with a considerably smaller distinction, greenback for greenback. In Europe, for instance, the VAT fee is 21% on electronics, however Google solely marked up the value by 7% in comparison with the US one. The remainder of the tax needed to be taken out of the corporate’s base revenue margin.

The Pixel 8 value is, on paper, a readjustment again to regular for ROW pricing. Markup percentages versus the USD value return to ~20-30% for euros and kilos, whereas the Australian and Canadian costs stay throughout the similar margin of the US pricing because the Pixel 7.

The graph above exhibits an an identical story for the Professional line-up’s value. Once more, the Pixel 6 Professional had the next value in Europe, the UK, and Australia, in comparison with the US, as a consequence of gross sales taxes. By protecting the identical price ticket for the 7 Professional the subsequent yr, Google additionally took successful — a lot in order that it mainly gave away the gross sales tax on its value in euros and Australian {dollars}. The Pixel 8 Professional is a return to extra financially sound costs, with a ~7-20% markup in international locations the place gross sales tax is utilized on the sticker value.

That is all good on paper, nevertheless it doesn’t assist with the sticker shock whenever you open the Pixel 8 and eight Professional’s product listings. It’s definitely going to be the primary asterisk I point out when my associates ask me concerning the cellphone I instructed them to purchase. I nonetheless suppose the 2 gadgets are good worth for cash within the pre-order stage, however they’re now not taking part in with as massive of a value benefit as in earlier years. With out the pre-order bonus? Effectively, I’ll need to do the mathematics, however we’re speaking Galaxy S23 Extremely-money right here, not even counting reductions on Samsung’s six-month-old cellphone, so it’s best to actually need an Android cellphone with a inventory expertise to get the Pixel 8 Professional.