Ringing Bells president Ashok Chadha says the price would be achieved by manufacturing in India at facilities the company is setting up in UP and Uttarakhand. The economies of scale would kick in once the company reaches a manufacturing capacity of 5 lakh units a month. He also suggests that components would be locally procured, which would help avoid the 13-odd per cent duty on imports. Experts like Gogia, however, say that even if components are found locally, they are usually more expensive than imported parts.

A lot of the benefits will come when the phone is actually made in India. But the phone that people saw at the launch, and has been sent to reviewers is a re branded version of the Adcom Ikon 4, incidentally priced at Rs 4,100 on Flipkart and other ecommerce sites. The branding is visible if the stickers are removed, and this version at least will not qualify for being “Made in India”.

Phones usually have a bill of material (BoM) cost on top of which comes the manufacturing cost, plus components like taxes and duties, and marketing cost and profits — together making up the final selling price. In offline sales at least, the dealer has a considerable margin — which is why you see large variations in prices of the same product. Of late, the trend has been to subsidise this figure to capture markets, especially India.
In the BoM, usually the cellular radio is the costliest — making up about 30% of the cost. With the processor and rest of the circuit, this could go up to 50%. The mechanical parts come next, followed by display, storage/memory and the camera component. In devices like the Apple iPhone (as also in some of the newer budget devices in the market) the display could end up being the costliest component. To give an example, according to US business analysis firm IHS Inc, in the iPhone 5s, the 4-inch retina display was priced at $ 41 and the wireless module at $ 32. The processor in comparison was just $ 19 in the 16 GB version, which had an overall cost of $ 198.

By this logic, the wireless module of the Freedom 251 should cost around Rs 65, a fourth of the phone’s price. And the display should cost even less.

Source : Times of India