Smartphone prices have always been higher in Korea than in the United States. For this reason, it is a common refrain that Korean consumers are being somehow taken for a ride.
The new Galaxy S9 costs 957,000 won in Korea and 767,000 won (around 720USD) in the United States. Additionally, the iPhone X costs 1,367,700 won in Korea while in the United States it costs 1,614,000 won (around 999USD). What can explain this?
One factor is the “Value-Added Tax (VAT)”. In most regions in the United States, except for those in exempted regions, consumers must pay a 10% VAT on top of the retail price. On the other hand, prices in Korea already include the VAT in their prices. Still, even with the 10% VAT, the Galaxy S9 is 110,000 won more expensive than in the United States.
This brings us to the second factor, which is market size. The population of the United States is about 320 million people, about six times the size of Korea. Furthermore, there is also a huge gap between subscribers in the United States and Korea to the countries' top carriers: Verizon (US top carrier) has 110 million subscribers while SK Telecom (Korea’s top carrier) has about 24 million subscribers. In other words, high volume sales reduce distribution and operating costs per product. This is why Samsung and Apple are able to offer cheaper phones to U.S. carriers because they buy far more phones than do carriers in Korea.
Finally, the U.S. is seen as a market that acts as a stepping stone for third countries. Therefore, Samsung, Apple, LG, Motorola, and even Huawei in China have no choice but to sell their products at cheaper prices to the U.S. because the US market is the largest market for third-country sales.
On the other hand, smartphone prices in Korea are not always the most expensive when viewed globally. The iPhone X costs 1,595,000 won in Hungary and 1,576,000 won in Denmark, which is more expensive than the iPhone X in Korea. Additionally, the Galaxy S9 costs 1,094,000 won in Britain and 1,117,000 won in Germany, which is more expensive than in Korea.
