The difference in price between storage tiers on a phone bears little relation to the cost of the additional memory. The pricing is doing something other than recovering cost.
Flash memory is a commodity
Storage chips are produced in enormous volume by a small number of manufacturers, and prices move with a well-documented supply cycle.
The incremental component cost of moving up a tier is a fraction of what the tier upgrade sells for, and the gap has widened as memory prices fell.
Little else changes in the device. The same board accepts different capacity parts, so there is no additional engineering to recover.
Tiers sort buyers by willingness to pay
Offering the same product at several prices lets a seller capture more from buyers who value it highly without losing those who do not.
Storage is well suited to this because buyers can self-assess their need, and those who need more capacity tend to be less price-sensitive overall.
The base tier exists to set an attractive advertised price, and the margin is recovered from those who move up from it.
The base tier is deliberately tight
Entry capacities are commonly set at a level that is adequate at purchase and uncomfortable within a year or two of photographs and applications.
Because the choice is permanent on sealed devices, the buyer is deciding once for the life of the product under uncertainty about future needs.
That asymmetry pushes cautious buyers upward, which is the intended effect of the tier structure.
Removing expansion strengthened the mechanism
Memory card slots once allowed capacity to be added cheaply after purchase, which capped what a manufacturer could charge for a tier upgrade.
Their removal was justified by sealing, thinness and the performance gap between cards and internal storage, all of which are real considerations.
The commercial consequence was that the storage decision became irreversible, and pricing adjusted accordingly.
Cloud storage moved the same charge elsewhere
Subscription storage substitutes a recurring payment for a one-off purchase, and it is often the cheaper route in the first years.
It also creates a dependency, since a device configured to keep only recent files locally becomes less useful if the subscription stops.
Comparing a tier upgrade against several years of subscription, rather than against a monthly figure, is what makes the two costs legible against each other.