The $999 iPhone X costs Apple just $357.50 to make, experts reveal

dailymail.co.uk ^ | 6 November 2017

[dennisw]

Makes the company more money per phone than its iPhone 8 model The iPhone 8 sells for $699 and has a gross margin of 59 percent

Apple new flagship iPhone X makes the company more money per phone than its iPhone 8 model, according to an analysis, which found the iPhone X's flashier parts cost Apple 25 percent more than the iPhone 8, but that it retailed 43 percent higher.

The iPhone X smartphone costs $357.50 to make and sells for $999, giving it a gross margin of 64 percent, according to TechInsights, a firm that tears down technology devices and analyzes the parts inside.

The iPhone 8 sells for $699 and has a gross margin of 59 percent.

The finding is surprising because technology products tend to become more profitable as they age and the parts for them drop in cost.

The iPhone X is a brand new design that went on sale on Friday, to apparently strong demand, while the iPhone 8 is an update on last year's iPhone 7, which itself was similar to the iPhone 6 released in 2014.

Apple declined to comment on TechInsights' analysis.

Apple is unique in the electronics industry for its ability to charge a premium price for its latest devices and for its ability to maintain that price even when selling devices through third parties like telecom carriers, said Al Cowsky, the costing analyst for TechInsights, which planned to post the results to its site late on Monday.

[House Atreides]

Go for it!

[SkyDancer]

Apple adds what they think they’re worth to the price of their products. Over priced junk.

[Cyclone59]

And tens of thousands of idiots will sleep in line for days to be the first to get them.

[Paladin2]

It’s good to cover Product Development and production tooling early.

Then there is advertising to support the LSM and NFL.

[Hammerhead]

I left a $55 dollar white dress shirt made for about 25cent in Bangladesh sitting at the Kohl’s checkout counter this evening.

[edh]

They should be adding the cost of the bill of materials and the cost to assemble. That’s the manufacturing cost.

Development costs cover the software, hardware, and other one time costs that go into realizing a product.

[SamAdams76]

I've always said that Apple prices their products too cheaply. They could easily double the price of everything in their catalog and almost the same amount of people would still buy the products.

Seriously, the iPhone is incredibly under-priced when you consider all that it does. Back in the early 1990s, I paid almost $3,000 for a computer with a 20MHz processor, 2MB of RAM and a 80MB hard drive. Yes, 80MB - which is barely enough to hold one album of MP3s!

The typical iPhone of today is millions of times faster than all the computing power of NASA during the moonshots.

Like I said, the iPhone is incredibly underpriced.

[Reeses]

Restaurants easily charge 3 times the cost of ingredients. Starbucks probably charges 30 times.

[reed13k]

I’m sure that just like with the Pharma industry reporting, they aren’t including the research and development costs and only the physical manufacturing costs.

[billyboy15]

Thank you for pointing this out. The huge majority of people have NO CLUE of how to arrive at a realistic cost of production.

[trebb]

I paid $150 for a phone that does everything I want and then some - can “converse” with it like the high end ones and get the same info anytime I want...

[norwaypinesavage]

"Assuming, of course, that you make a desirable product of quality."

It's not possible to "make a desirable product of quality" if all of your product design, development, and production resources must come from only a 17 percent markup, especially in a rapidly moving high tech industry.

[Fresh Wind]

How do they calculate the price to manufacture? Do they allocate all the research, development, and corporate overhead to each iPhone? If you don’t charge your overhead back to your actual products that produce revenue, your accounting is not really accurate.

The problem there is that on a per-unit basis, the R&D overhead drops as the number of units produced increases. If your R&D is $1M, and you produce 10 units, that's $100K each. If you produce a million units, that's a buck each. (hypothetical numbers, obviously).

So, yeah, it's tough to come up with a meaningful cost to produce for something like an iPhone, or any other complex product. And it's easy to fold some bias into those numbers, which may well be true in this case.

[mad_as_he$$]

Q. How do you shear sheep?

A. Make an iPhone for $358 and sell it for $999.

[Bloody Sam Roberts]

That's a far smaller margin than the margins on a lot of what people buy everyday. Shampoo? It costs very little to make but women will pay exorbitant amounts of money to get their favorite brand.

[MayflowerMadam]

Much like the outrageous markup of contact lenses which take just a few cents to manufacture. Hubby’s PhD is in Optics and testified about this at some hearing very long ago.

[MayflowerMadam]

Exactly. Nobody is demanding people to pay too much for their gadgets. I’d rather have a flip phone and spend the remaining $800 on fabric for quilting. Priorities.

[central_va]

It's a good thing they went to Asia to make these otherwise an i-phone would cost $85,300 if made in the USA. /sarcasm.

FUA

[redgolum]

Which is part of the reason wages are stagnant. You have to control costs, and wages are one of the few places you can do it.

[central_va]

FoxConn uses suicidal coolies to make our iphones. Seems to me Apple could reduce their marigin by a tiny bit and let Americans make them for us.