Google Play isn’t the only place where you can pick up the new Nexus 5 without a contract, but if you decide to shop elsewhere, you’re likely to pay a lot more for it. In the U.K., for example, the 16GB variant costs £299 ($481) direct from Google, but some stores are charging as much as £400 ($643).
This isn’t just a bid to make a quick buck while the handset is sold out on Google Play. The reason for these high prices is that the cost of the Nexus 5 on Google Play actually undercuts the prices retailers must pay to wholesalers.
The Guardian reports that some retailers have to pay £350 ($563) for the 16GB device from wholesalers, and they must sell it on for even more than that to make a profit. Even those who buy the handset direct from LG — which manufactures the Nexus 5 — pay around £50 ($80) more than the Google Play price.
“We saw the same thing with the Nexus 4,” explained Ben Wood, mobile analyst with research firm CCS Insight. “With the Nexus line, Google always goes for very aggressive pricing with its manufacturing partner.”
It’s unlikely Google is selling the Nexus 5 at a loss, though, Woods said. Instead, it’s probably selling the device with a very small profit margin, or close to cost.
But we know the Nexus lineup isn’t necessarily here to make money; it’s here for Android fans and developers who want access to the barebones Android operating system — without all the tweaks and add-ons that are often installed by third-party manufacturers like Samsung and HTC.
If you’re planning to buy a Nexus 5, then — and you don’t want to get in on contract — you should really buy it from Google Play. Even if it means waiting a couple of extra weeks for it.