Today has been another big news day for Nexus 5 developments, and hot on the heels of announcements from Telstra and LG regarding carrier and retail availability respectively, we’ve now got a bit of an insight into why there’s such a huge difference in price between the Nexus 5 via the Play Store and via retail channels.
Ausdroid was surprised to learn that while the 16GB Nexus 5 is available for $399 online, the retail version will go for $699, representing a 75% markup in price. This is a significant markup — we as Australians are used to paying an ‘Australia tax’ for products launched overseas when they reach our shores, but a 75% markup is quite a lot to stomach, considering that (on average) this usually reaches around the 20% mark.
LG gave this statement to Delimiter earlier this afternoon regarding retail pricing:
“Nexus 5 handsets sold through the Play Store are done so by Google and are subject to pricing decisions made by Google.
Offline and retail sales through local Australian retail outlets and sales channels are the subject of a completely separate pricing structure that provides for a different support and service model for consumers.
To this end, this provides for a range of different cost elements, including transport and logistics, local service and support costs associated with retail sales staff, physical stores, live sample devices for demonstration, and many other services functions that consumers can access when a device is purchased at a physical store location.”
We have heard rumours that Google sells the Nexus 5 online at almost zero profit, or even at a loss, in order to stimulate interest in the products and the operating system. Considering the hardware contained in the Nexus 5, and the price of equivalent models in retail, today’s announcement of retail pricing certainly seems to support this rumour.
That being the case, Ausdroid can really only recommend one course of action. If you want a Nexus 5, you really should be looking at buying online (links in the site header, above). The kind of pricing Telstra and LG are pushing for the Nexus 5 is nothing short of poor value.. and we’d recommend buying your own handset online at half the price, and connecting it to a SIM-only plan without a 24 month contract.