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The worst deals in tech: Are you being fleeced by these 7 overpriced products?

Christopher Null | Aug. 20, 2013
That shiny new tech toy might appear irresistible--until you realize its mark-up is obscene.

Computer and audio-video cables
Average cost: $45 (for a name-brand 8-foot HDMI cable)

Average cost to produce: about $3 (TechHive estimate based on market analysis and review of financial statements)

There's no love lost between consumers and the cabling industry. Just look at Monster Cable, which has long been criticized for charging extreme prices—often over $100—for what amounts to some twisted wire with some rubber wrapped around it.

Sure, generic cables from Monster's competitors may not bear the THX logo, or boast "hyper speed" certification, or come with gold connectors crafted on the thighs of virgins, but it turns out that the vast majority of people won't need all that stuff. Repeated studies and tests have found no differences between brand-name and generic digital cables. Other studies have found that the performance increase you get with high-end cables is hardly worth the extra cost.

In the digital realm, a cable either works or it doesn't. There's no faster or slower, and consumers have long been advised to buy the cheapest cable that works for their particular need. This means buying based on type (for example, HDMI version compatibility), connector size, and length, rather than brand name. It's important to point out that there are different HDMI standards, and while cable "quality" may be a debatable point, not all HDMI cables work with every application.

As for the whipping boy Monster, its strategy seems to be having its share of difficulties: Consumers may have caught on to its more-than-50-percent gross profit margins on premium cables, and are buying fewer of them, according to the company's financial statements. Those statements also show that the company spends almost as much on marketing and administration costs as it does on, you know, making cables.

Smartphones
Average cost: $549 (for a 16GB iPhone 5, unlocked)

Average cost to produce: $200

Deep carrier discounts often blind consumers to the true prices of smartphones. Really, what's a couple hundred dollars for what amounts to a powerhouse computer that you keep in your pocket and use all the time? Subsidies that the carriers pay directly to all phone manufacturers muddy the picture, but you can get a clearer view of the real cost of a phone if you buy an unlocked model that isn't tied to a contract.

At $549 unlocked, the iPhone 5 is emblematic of the dazzlingly high cost of smartphones today (though it's hardly alone). Based on iSuppli teardown estimates, the actual cost of the components inside the device amounts to just $200, or only about 36 percent of the final retail price of the phone.

Faced with prices like that, U.S. consumers have been driven to the subsidy model—and it seems to be working. The worst part of this scheme is that we get increasingly ripped off the more features we add on: Apple's 32GB iPhone costs the company only an extra $10 in component costs, iSuppli says, but we pay an additional $100 at retail for it.

 

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