Gone are the times when for 1,200 euros you could build a top-of-the-range gaming PC. The price of graphics cards has been out of control for a few years now and today the top-of-the-range graphics cards cost more than an entire gaming PC, to the point that mid-range graphics cards already cost much more than the flagships of a few years ago. Why is the price of graphics ever higher and won’t stop rising?
Many of you will say that the fault lies with inflation, the price of money. The reality is that although we cannot deny that inflation also has to do with the increase in the price of hardware components, its part of the blame is actually quite small compared to the rest of the factors, and it is precisely these that which we are going to talk about today in this article.
What defines the price of graphics cards?
Many factors determine the price that consumers pay for a product such as a graphics card, and while it is true that the same can be applied to other components such as processors or motherboards, in GPUs the “problem” is a bit more pressured than in the rest of the segments due to the demands of the users, and we are not referring to legal demands but to what people, as PC users, ask and demand from the manufacturers.
A few years ago, gaming at Full HD resolution and 60 FPS was what we were all looking for, but these days this has also been left behind and we increasingly have gaming monitors with higher resolutions and higher refresh rates to have better gaming experience. game, which forces us to raise the performance levels quite a bit. At the same time, the graphic quality of the games has been significantly increased and this is what we users ask for (photo realism). Right now we could say that gaming at 4K resolution and 60 FPS or Full HD and 240 FPS are the brands to beat, and obviously, this requires more and more powerful graphics cards.
The cost of research and development
Of course, getting to create more powerful graphics cards entails a greater effort, both human and economic, for manufacturers. Both AMD and NVIDIA -and in recent times, even Intel- have had to invest heavily in R&D to develop new generations of graphics cards, much more capable than previous generations and whose goal is to provide the best gaming experience at high resolution, graphic settings, and frame rates per second.
As you may already suppose, greater investment in this entails a higher cost to create the final product, so the price at which they have to sell it to bring benefits with it increases. Today’s graphics cards are not only much more powerful than those of yesteryear, but they also have technologies developed specifically for games that have made them even more expensive (for example, ray tracing, DLSS, AI, etc.).
The cost of manufacturing, raw materials, and component shortages
We all know that the demand for gaming products is booming, and many manufacturers are being overwhelmed. Both NVIDIA and AMD have already declared that they are in a situation of shortage because they do not receive enough chips to be able to manufacture their products, the manufacturers do not give enough and this is further worsened by the situation of shortage of some raw materials. This has meant that primary manufacturers have increased their products and canceled discounts, as TSMC has already announced, something that again affects the price we pay for products such as graphics cards.
And it is that unfortunately when there is a shortage of a product, what primary manufacturers usually do is raise the price of their products with a double objective: to get more profit from what they sell, but also to sell less and reduce this situation of shortage (according to they say the price increase is precise to alleviate selling less). Be that as it may, they do not want to lose but rather the opposite, and those who pay more, in the end, are the consumers.
Is the price we pay for graphics cards fair?
As we have explained, the price we pay for graphics cards today (and at any time in the future) is the result of a sum of circumstances, such as the manufacturer’s investment in R&D, the supply and demand that Shortages or overstocks are caused by the cost of raw materials and the capacity of chip manufacturers, added of course to the percentage of profit that manufacturers want to get from their products.
Entering to assess whether the price we pay for graphics cards is fair or not is something of course subjective since ultimately only NVIDIA and AMD know what cost they have for them both at the development and manufacturing levels. However, if we see, for example, the financial results report of a company like NVIDIA, with quite high margins compared to other manufacturers, we can determine that without a doubt this manufacturer sells its products with a very, very high-profit margin. , which means that they could easily sell them considerably cheaper (although that would mean having less profit, something that they will surely not be willing to accept).
Unfortunately, the market trend has brought us to this situation and consumers have no choice but to jump through hoops, as long as we want to have the best performance, of course, since all manufacturers continue to have models in the entry-level and low, with much more reasonable prices for all types of users, especially those with tight pockets. The summary of this is that “if you want the best, you have to pay for it”, presumably.