PC hardware prices have been steadily increasing over the past year, and many gamers are wondering what’s going on. While it can be frustrating to buy a new graphics card and see that the next model came out six weeks later for $50 less than you paid, there is more behind high hardware costs than just cutthroat pricing alone.
- How The Chip Shortage Affects Different PC Parts
- When Does High Hardware Pricing Usually Happen?
- When Does High Hardware Pricing Usually End?
- When Will Hardware Pricing Become More Affordable?
- When Will Parts Become More Affordable? When Will We See Price Increases Again?
- Why is PC Hardware So Expensive? The Formula for Calculating Cost of Goods Sold
- So What Should I Do?
How The Chip Shortage Affects Different PC Parts
The shortage of chips is affecting different PC parts in different ways. For instance, the shortage is having a big impact on graphics cards.
This is because graphics cards rely on discrete processors known as GPUs, which are in high demand due to the gaming and cryptocurrency markets. NVIDIA, one of the leading GPU manufacturers, has even warned that the chip shortage could result in fewer gaming laptops being released this year.
The shortage is also impacting motherboard manufacturers, as these boards contain chips that manage data communications between individual parts of a PC. For instance, Asus recently announced that it was delaying the release of several new motherboards due to chipset shortages.
CPUs are not as badly affected by the shortage because they can be manufactured without a chip. However, companies that manufacture CPUs are paying more for chips so they are likely to increase the prices of CPUs.
RAM is not affected by the chip shortage because it does not require a chip to be manufactured.
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When Does High Hardware Pricing Usually Happen?
Traditionally, high prices in the PC realm tend to happen when there is a big shift in technology. The introduction of the Pentium 4 is a good example: it was released at a price point similar to its predecessor, but it had nearly double the clock speed and Hyper-Threading.
All this extra silicon meant higher costs for manufacturers, which they passed onto the consumer. Another example is the introduction of 3D graphics hardware; prices rose significantly after NVIDIA released its GeForce 256 card (not to mention ATI’s Radeon 7xxx series cards).
Nowadays, you can expect high hardware pricing whenever NVIDIA or AMD release new GPUs. This time might be different though; it looks like AMD is keeping its HD 7000-series prices near their current level until the next generation of cards comes out. So, if you see NVIDIA’s GTX 600 series on sale today, it is likely because they are clearing their inventory to make way for the 700-series.
When Does High Hardware Pricing Usually End?
Fortunately, history shows us that high prices in the PC realm tend to end when a new generation of cards is released. GPU manufacturers sell their older-generation cards at lower prices to clear room for the newer ones, and prices go back down as time goes by.
NVIDIA’s GTX 500 series (GTX 580/570) are good examples; their launch prices were almost identical to the GTX 400 series, but they are now being sold at significantly lower prices.
Also keep in mind that there are two main times of year when hardware gets cheaper. First is right before the major holidays – retailers tend to discount their products slightly to get people into their stores or online shops. Second is after the holiday season ends; it’s a good time to buy as retailers want to get rid of their holiday inventory so they can make room for the next year’s models.
When Will Hardware Pricing Become More Affordable?
Unfortunately, we have no number-crunching magic that allows us to predict when hardware pricing will become more affordable. The best we can do is look at past trends and hope that they continue in the future. Here’s a list of some points from history that might help us predict when hardware prices will go back down:
In general, waiting two years to buy a CPU or GPU is recommended. This allows manufacturers time to get rid of their older inventory. In most cases, new models offer only slight changes over older ones, so there is no need to upgrade when a new model is released.
We are currently in the transition period between HD 7000-series cards and GTX 600 series cards. Based on previous history, this means it would be wise to wait until the newer models come out before buying our next GPU. The same can be said for AMD’s upcoming R7/R9 series cards – it would be wise to wait for those before buying a new Radeon.
Pentium processors are the only exception to the above rule. Rather than releasing new models of Pentiums, Intel has instead increased their clock speed over time. We have seen many cases where new Pentiums are only slightly faster than older ones, but at least there’s no need to wait two years – like with AMD and NVIDIA graphics cards.
Keep an eye on the RAM market; it should be relatively affordable by this time next year. DDR4 is set to launch in 2014, which should spur DDR3 prices down even further (if they aren’t already at rock-bottom levels by then).
When Will Parts Become More Affordable? When Will We See Price Increases Again?
Unfortunately, we don’t know for sure when hardware prices will come back down. The closest thing we have to a crystal ball is history, and it shows us that this time may be different. Let’s hope history does repeat itself and we see our next PC hardware price increase within two years.
On the flip side, we could be seeing the last “low” point for a long time if semiconductor improvements become more expensive (e.g. if transistor counts keep increasing but current production becomes more costly). If this happens, then we might see price increases continuing for longer than two years.
Why is PC Hardware So Expensive? The Formula for Calculating Cost of Goods Sold
The cost of a product is a calculation of the expense required to make it. It is not a reflection on the value or desirability of that product. The value of PC hardware is determined by its performance, not its cost.
In order to calculate the cost of goods sold, you need to divide your total revenue by your total expenses. In this way, you can get an idea on how much every part of your spending contributes towards your profit.
So What Should I Do?
If you are planning to purchase a new graphics card, CPU, RAM, or other PC component in the next month or two, it would be wise not to spend more than is necessary. Once you factor in shipping costs and taxes (if applicable), your total could end up being very expensive.
However, if you’re looking to upgrade in the next six months to a year, then it might be worth waiting for the newer models – but only if prices have dropped significantly or new models have come out by then. If you can get an older-model card for 50% off of its launch price, then it would be a good idea to wait.
- Look for computer parts on sale
- Compare prices between online and brick-and-mortar stores
- Check out used computer parts stores
- Search for online coupon codes
- Take advantage of student discounts
- Join a computer hardware forum to get deals from fellow members
In conclusion, it’s best to check out historical patterns before spending too much on hardware right now – but don’t worry if you’re looking to upgrade in the near future. If you have a little patience, you might get lucky and see some amazing deals in the coming months.