Is the Zenfone 3 overpriced?

A lot of our readers have chimed in the comments and asked us directly if we agree that the Zenfone 3 is overpriced, so we’re giving you a more thorough answer here. We also tackled this topic last week but we did not zero in on the rationale — Why are people disappointed with the Zenfone 3?

First off let’s break down the retail prices first:

• ASUS Zenfone 3 Max (3GB RAM / 32GB ROM) – Php8,995
• ASUS Zenfone 3 Laser (4GB RAM / 32GB ROM) – Php11,995
• ASUS Zenfone 3 (5.2-inch / 4GB RAM / 64GB ROM) – Php16,995
• ASUS Zenfone 3 (5.5-inch / 4GB RAM / 64GB ROM) – Php18,995
• ASUS Zenfone 3 Deluxe (6GB RAM / 64GB ROM) – Php34,995
• ASUS Zenfone 3 Deluxe Special Edition (SD821 / 6GB RAM / 256GB ROM) – Php44,995
• ASUS Zenfone 3 Ultra (4GB RAM / 64GB ROM) – Php32,995

Asus PH has practically covered almost all price points in the market, starting with the sub-Php9,000 Zenfone 3 Max all the way up to the Php45k Zenfone 3 Deluxe Special Edition.

When we say overpriced, especially in the Android ecosystem, we always refer to the hardware specifications. If the set of specs are lower than what other competitors are offering in the market (in terms of SRP), then the phone is not overpriced. We list down 6 Smartphones that Asus wants the Zenfone 3 to Compete Against.

The list includes a couple of Samsung Galaxy A series, as well as Huawei, OPPO and Vivo. Most of these are considered contemporaries or desired competition for Asus. Our chart shows that the mid-range Zenfone 3 have competitive hardware compared to the alternatives.

A better way to look at it is remove the brand names and labels of each device and simply look at the specs. From that perspective, we can now agree that the Zenfone 3 is not really overpriced.

However, we think the proper term to use for the disappointed that a lot of people are voicing out is that the Zenfone 3 is “over-valued“. A phone can be competitively priced yet over-valued. Let us explain.

When a brand puts a price tag on a specific product that they release, the price tag includes a number of factors — build cost, logistics cost, taxes and duties, brand equity, distribution margins.

Build Cost – this is the basic cost of components as well as the assembly of the device. Pretty straightforward.

Logistics Cost. This includes shipment, packaging, fulfillment and related factors.

Taxes and Duties. Some countries have very expensive import cost while others have zero import taxes levied on the devices. Other countries also state/city taxes, federal taxes, sales taxes, and for the Philippines it’s the 12% VAT.

Distribution Margins. Except for a few ones like Xiaomi or OnePlus, vendors do not directly sell their products to customers. It goes thru various entities like distributors and dealers. These 3rd parties may get between 8% to 30% margins (individually combined) or sometimes even higher but in the electronics industry a 10% margin for dealers is the average. Smartphone cases can have 200% – 300% margins so if you buy an original Spigen case for your iPhone 6s for Php990, the dealers cost could be just Php250 to Php350.

Brand Equity. This is the tricky part since this can be arbitrarily imposed by the vendor. This cost includes marketing budgets as well as service and warranty offers. Brands can put 20% or can go up to 200% for this factor.

Big named brands like Apple can demand much higher margins for brand equity. The iPhone 6s has an estimated build cost of about $236 but they can sell it for $700. That’s a huge margin that’s mostly attributed to the brand’s value.

In comparison, the Zenfone 3 can also have more or less the same $236 build cost and they end up selling it in the Philippines for $360. That’s just half of the selling price of an iPhone 6S that costs the same to produce. But we bet, the iPhone 6s is the hotter item of the two and people are willing to pony up for the much higher price tag.

How come customers will accept Apple’s pricing but not Asus? That’s where the “over-valued” perception comes in. Perception matters. That’s why Apple spends a lot on advertising. Samsung too (remember the time Sony, Motorola and BlackBerry phones were all valued much higher than a Samsung phone?).

So yes, the Zenfone 3 is not over-priced, it’s just over-valued.

You may also like...

11 Responses

  1. I wonder how much Asus is paying you guys for articles like this, in an effort to justify their pricing.

    But yes it’s true. Some variants are great and priced competitively pero that’s about it. If it was really as worth it as you make it seem, can you honestly tell us that you’re purchasing one with your own money? Yung deluxe special whatever ha, YUNG 45k.

    • Did you read the whole article? We said it’s overvalued. Why would Asus pay us to say their Zenfone 3 is overvalued?

      • JAMES says:

        He didn’t understand the article, maybe he read it, IMO. I believe “some” of the articles in Yugatech are paid, which are obvious on their league. Most notably are the telco-specific promos or the likes. This is still my preferred gadget blog before Unbox, though I jump anywhere.

        I agree with this article, they are actually trying to convince Asus to lower down their pricing or they’ll flop, probably not on Zenfone 3 (5.1,5.5 variants), but on the other units along with them.

        And I find new UI intuitive and loads fast. 🙂

      • Phone Guy says:

        Hi Team Yugatech,

        What’s the difference between the Zenfone 3 max, laser, and the regular Zenfone 3? Also, can we request for a comparison between the Zenfone 3 and the Samsung A9 and A9 Pro?

        Thanks!

    • dzandueta says:

      I wonder why you think Asus paid Yugatech to write this piece, even though you (seem to) agree with their piece.

    • Lol yugatech says:

      When an article uses a term not usually used for commercial products to defend something, you know what’s up

  2. weenieboy says:

    was planning to buy the zenfone ultra but when i saw the price on the same league of samsung, if im buying the same price between samsung or asus, i will be going for samsung. probably settling for xiaomi hehehe

  3. brandon says:

    If the set of specs is lower than what other competitors are offering, in terms of SRP, then the phone is overpriced.

  4. Ruben says:

    Asus is really over priced because the screen is 1080p and it cost 44k for deluxe. Compared to Note 7 or S7 edge. Which will you prefer at that price range??

  5. Rem says:

    For my opinion, I think its better to buy LG Nexus 5X for now than ASUS Zenfone 3

    BWT, Thanks for the article

Leave a Reply

Your email address will not be published. Required fields are marked *