I was thinking the same, and I have the LG Nexus 5. Most current gen smart phones without contract are more like $600.

Which is pretty outrageous, given it typically costs an OEM approx $200-$260 to manufacturer a phone.

The Galaxy S5 costs Samsung something like $246 to manufacturer. It sells for $649 off-contract. Pretty big margins for somebody in that pipeline.

It's not outrageous when you consider the marketing, distribution, R&D costs (incl. for future models) and of course, increasing wages (unless you like having people slave away 12 hours a day for $200/month). If you break even, what's the point of establishing a factory in the first place?

Doesn't Samsung spend the most out of all mobile makers on marketing? I would assume they're also paying additional costs for Google Services, patent licenses and other things, which also cut into the actual margin.

That's the part people seem to forget. Software can be expensive because they are paying for several licenses (and for the hardware too) as well us paying several devs, managers, etc. to produce the software that runs on the phone.

> typically costs an OEM approx $200-$260 to manufacturer a phone

Yeah if you can sell 40+ million a quarter. OTOH if you're sales are more like HTC's you sell your flagship phones to carriers for $400 and break even.