Why are network switches so expensive?


We often get asked ‘Why are network switches so expensive?’ Short answer is because of research and development & quality of components inside them.

What is a network switch?

A network switch is a device used to connect multiple devices like your computer, laptop, smartphone, or tablet into one network. A network switch allows you to share data and other resources across the connected devices at much faster speeds than what you would be able to achieve with Wi-Fi.

Why are network switches so expensive?

However, it might come as a surprise that many people find network switches so expensive. If you are reading this article on your phone or laptop right now, take a minute to think about why these small pieces of computer hardware are so expensive? The answer might seem obvious at first – because they are better! And yes, that’s correct – network switches are extremely good at their job! They can move enormous amounts of data in milliseconds without ever having to slow down. This makes them perfect for people who requires high bandwidth and low latency – like gamers, video editors and cryptocurrency miners. But for the average household user, there is very little need to spend hundreds of dollars on a network switch.

In fact, it would be a complete waste of money! So what is going on?

The answer lies in the cost of research and development which goes into building these top-of-the-line switches that can deliver such incredible speed and performance. Network switch makers have to pour huge amounts of capital into developing these products before they go on sale. This takes time, effort and a lot of money – but once they have perfected their product, everything changes… And this is the reason networks switches are so expensive.


Once a network switch has been created, the cost of maintaining it relatively low – especially when compared to the price of development. The same applies for other electronic gadgets like smartphones, where most of the money goes into R&D before they are released upon the market.

For consumers who are not looking to purchase top-of-the-line equipment for their home or business, there are still options available that won’t break the bank. Business networks can often get away with buying less advanced networking gear since they have more important things to spend money on than R&D costs. Consumers, however, should probably only buy their own network switch after it has been out in the open for at least six months or so and major flaws and bugs have been identified and fixed.

Development Costs

Network switches aren’t exactly cheap, but not because of the development costs involved with producing them. The price goes up as the features go up, but those added features don’t just come from thin air; they require more powerful processors that cost money to produce, as well as components such as memory, cabling and connectors. These extra parts drive up the expenses associated with making network switches which is what causes prices to be so high for people who only need a couple ports on their switch or want to save some money by buying a cheaper model.

Businesses can even take advantage of special pricing deals if they decide to purchase several networked devices at once and pass those savings onto their customers. Networking is an important aspect of any business nowadays, whether it be for networking computers or just networking different buildings on a campus. Either way, you need to have some type of device that allows the sharing of resources and creates the network itself.

The cost of new switches usually goes down over time as new technologies are developed, but by then new models with newer features come out which drives the prices back up again. For some people who don’t understand how internal components work (which would include most non-tech savvy consumers), buying used equipment can save them money; although there are some risks involved in purchasing second-hand hardware such as incompatibility issues between devices which may not be immediately noticeable when setting everything up.

Components in a switch

It’s pretty clear how expensive switches can be, but what exactly makes them so pricey to begin with? To answer that question, you need to understand the various components available in a switch and how much each one costs. Switches usually only provide the “dumb” part of the functionality (connecting devices), which means all processing power has to come from either an attached device like a server or router, or even another switch if you’re getting into larger networking gear.

The chipsets that handle switching functions are pretty expensive; especially considering they also have to offer wire-speed throughput on every port at all times without any noticeable lag. The latest hardware being produced by bigger companies such as Intel and Broadcom usually cost a hundred dollars just for small 5-port models and can easily skyrocket up to thousands of dollars for a 24-48 port switch.

With the cost being so high, it’s no wonder that even small businesses tend to have network switches which cost more than their entire laptop-and-desktop computer put together. The only reason why they’re almost commonplace in homes is because consumer routers usually also come with a built-in 4 or 5-port switch as well as wireless networking capabilities; often at little or no extra charge compared to buying each function separately.


The best way to reduce costs is by using commodity (off the shelf) hardware instead of proprietary (custom made) hardware such as those produced by Cisco and Juniper , but this doesn’t always work since some companies base their whole business on building all their own networking hardware.

There are actually good reasons why networks switches tend to be expensive, though. Here’s a list of the top 2 most important ones:

1) You get what you pay for

The saying is true when it comes to network switches because they come in many shapes and sizes – from cheap D-Link brand bargain basement models with 4 or 5 ports that can’t handle modern speeds at 100MBit/s let alone Gigabit Ethernet (GbE), up to very large campus core bundles containing 40 x 48-port rack switches that run at 10GbE plus. Generally speaking, the more expensive the switch, the more ports it has, its bandwidth capacity will be higher, its CPU more powerful, and its features more comprehensive.

2) Switching is a complicated business

In order to work as advertised, network switches have some serious math to do on their way from A to B. First off, they need to inspect the contents of each network packet as it comes in – what kind is it (unicast? multicast? broadcast?), how big is it, which port does it want to go out on, where’s this coming from etc. Then there’s the complex task of learning MAC addresses across many devices connected with cables making up a mess of twisted pairs and trios of copper wire plus all those fibre optic strands… nearly impossible without proper ASIC chipsets designed for the job. Add header compression into that mix too, and it’s a wonder switches are so cheap.

In fact, when you consider the physical equipment involved (a lot of metal and plastic) and the resources needed to build, test and ship millions of network switches each year – not to mention research and development costs – it doesn’t take long before the large profit margins start to make sense. They need that money too; because without their networking expertise we’d all still be using 1Mb/s dial up modems…

The switches also get cheaper as technology becomes more efficient too: each generation of switch will incorporate new features such as layer 3 routing, QoS support, stacking support etc. The top-of-the-line Catalyst 6500 manages around 2 million packets per second with each running at a throughput of up to 12.8Gbps, for example.

Which brings us back to the original point: why are they so expensive? The short answer is that they’re expensive because they can be – and there’s no doubt that buying a switch helps a business improve their bottom line substantially over time. No-one knows how long it will take (or if) prices will drop down to commodity levels like PCs though; what we do know is that when you buy your next company switch, you’ll probably get an even better one for free in six months’ time…

As far as business goes, this means switching equipment providers cannot afford to skimp on equipment (although many try). Fortunately, most people don’t care about hardware as long as it does what they need – so the market stays healthy with a large share of both users and providers.

Second-hand switches

That said, there is an option for those not willing to wait years before prices drop enough to be reasonable: second-hand switches.

If you are thinking of buying new network equipment or simply have no interest in doing so but are interested in extracting maximum value from your existing kit, then choosing refurbished networking equipment could be just what you’re looking for. Although refurbished networking supplies are unlikely to be available off the shelf at your local computer store, that doesn’t mean that they don’t exist. There are many outlets that deal solely with gently used, tested and thoroughly reconditioned pre-owned computer hardware.

Benefits of second-hand switches

Network switches are no different. A good suite of used switches will cost hundreds, if not thousands, less than buying new equipment, especially when you take into account the extended lifetime that refurbished networking products typically enjoy over their factory-fresh equivalents. There are numerous advantages to buying refurbished network accessories rather than new ones. Some of these benefits include:

1) Financial Advantages

2) Extended Product Lifetime

3) Higher Quality Standards Than New Equipment: First and foremost, from a financial point of view, there is simply no comparison between purchasing a brand-new switch and picking up a reconditioned one. In many cases the price differential can be as much as 50% or more. This is beneficial to the buyer on a number of levels.

4) Extended Product Lifetime: When equipment is refurbished it undergoes extensive testing to ensure that all components are in full working order. Thus, items such as hard drives or redundant power supplies are changed out if they have any wear and tear on them. Not only does this extend the product lifetime but it can also eliminate downtime due to malfunctioning products altogether.

5) More Efficient Manufacturing Process: When you take into consideration all of the above reasons, it becomes easier to understand why so many companies are adopting the practice of purchasing reconditioned IT equipment. There are numerous benefits to doing so including lower price points, better products designed with durability in mind, faster deliveries and overall enhanced customer service.

So if you run a small business in Melbourne and require fast IT support, get in touch with one of our technicians.

I am a computer engineer holding a bachelor's degree in Computer Science, complemented by a Master's in Business Administration from University of Strathclyde, Scotland. I currently work as a Senior IT Consultant in Melbourne, Australia. With over 15 years of...