$649 iPhone 5s Costs Apple $199 To Make

[Pupik]

The new iPhone 5s costs Apple about the same to build as last year's iPhone 5, according to a report from IHS. The company has torn down both the iPhone 5s and 5c, and assessed where the internals came from and what they cost.

 

The bill of materials for the 16-GB iPhone 5s comes to about $191. The device costs about $8 to manufacture, bringing the total to $199. The 64-GB model costs Apple only $19 more to make, for a total of $218. The full retail price of the 16-GB 5s is $649, while the 64-GB 5s goes for $849. It's a shame Apple is only marking the price up by (a minimum of) 326%.

http://www.informationweek.com/hardware/handheld/649-iphone-5s-costs-apple-199/240161733

[sanctified Veteran]

Again, these articles always ignore that the cost of production is not the only thing that affect a product's cost. You have to consider all the iphone staff (including assembly line workers) payment, publicity, retailer contracts, carrier contracts with the company, etc.

[+SOOPRcow MVC]

I'm no apple fan boy by any means but I really do hate stuff like this. Of course that is just raw parts and assembly. It doesn't include any of the labor and research that went into developing the product. No doubt they are still making a significant amount of money but it's not a "minimum" of 326% markup. It's probably not anywhere close to that. (And yes, I understand they address this in the article to a very minor degree but it is still a pretty misleading article)

[Roger H. Veteran]

Since Apple is not a non-profit company last time I checked good on them for bringing in the most money possible. Obviously they don't make that much on every phone sold (others before me pointed out all the others costs involved besides the B.O.M.) but i'm sure they still bring in a sweet amount of change.... $15-30/phone..... maybe $50?

[theyarecomingforyou]

And a cup of coffee doesn't cost ?3 to make yet businesses have to pay staff, pay rent and make a profit. That said, there's little doubt that Apple products are massively overpriced.

[NeoandGeo]

Again, these articles always ignore that the cost of production is not the only thing that affect a product's cost. You have to consider all the iphone staff (including assembly line workers) payment, publicity, retailer contracts, carrier contracts with the company, etc.

 

First reply is a business reaming apologist. That's original.

 

The cost of research and development goes into every electronic device, yet phones are the only ones marked up this high relative to the cost of the parts used to manufacture. Why does an iPod 5g cost half of an iPhone 4s when the only notable difference is the absence of cell radios? Cell phone markups are absolutely absurd and you know it.

[farmeunit]

Since Apple is not a non-profit company last time I checked good on them for bringing in the most money possible. Obviously they don't make that much on every phone sold (others before me pointed out all the others costs involved besides the B.O.M.) but i'm sure they still bring in a sweet amount of change.... $15-30/phone..... maybe $50?

I agree there are other costs, but they make a LOT more than you think:

http://www.reuters.com/article/2012/07/26/us-apple-margins-idUSBRE86P1NI20120726

 

That's from last year, but will give you an idea of profit on each device.

[einsteinbqat]

We should calculate the cost of a Rolex watch or a Ferrari, and then compare it the price tag. I suppose that there must barely be any mark-ups there. The price that you pay for the aforementioned products must be really close to their parts prices! /s

[Xilo]

Clothes anyone? Pennies to make but huge ass markup.

[spenser.d]

We should calculate the cost of a Rolex watch or a Ferrari, and then compare it the price tag. I suppose that there must barely be any mark-ups there. The price that you pay for the aforementioned products must be really close to their parts prices! /s

 

To be fair, neither of those companies are selling 9 million of anything over a weekend.  That being said Apple is just selling them for what people will buy them for and I can't really fault them for that.  If you've got a problem with it, there are plenty of cheaper (and arguably better) options out there.  If you want one that bad, suck it up and get one.

[dead.cell]

Yes, let's lower the price of a phone that's selling millions over a launch weekend. That makes sense...

 

Some people don't know how to run a business apparently.

[DeadEndAccount]

First reply is a business reaming apologist. That's original.

 

The cost of research and development goes into every electronic device, yet phones are the only ones marked up this high relative to the cost of the parts used to manufacture. Why does an iPod 5g cost half of an iPhone 4s when the only notable difference is the absence of cell radios? Cell phone markups are absolutely absurd and you know it.

 

Yet you ignore all the other costs he listed plus the etc. part at the end; there are a mountain of patents that have to be paid ranging from hardware though to audio compression and so on. Apple does have high margins, above the industry average of 27%, but it is no where near the claim of the article that the OP posted.

[Sebass]

Clothes anyone? Pennies to make but huge ass markup.

+1 spot on. The biggest rip off in history...well that and movie popcorn :laugh:

[vcfan]

the only reason why companies can get away charging these high prices of phones is because of multi year contracts, which give the illusion to people that they're getting the phone for only a hundred of two hundred dollars.

[Growled Member]

Again, these articles always ignore that the cost of production is not the only thing that affect a product's cost. You have to consider all the iphone staff (including assembly line workers) payment, publicity, retailer contracts, carrier contracts with the company, etc.

 

That's true but even then they made one hell of a profit.

[Shiranui]

Clothes anyone? Pennies to make but huge ass markup.

I refuse to wear anything prominently marked with someone else's name.

I'd sooner wear a t-shirt that said "TW4T" on it.

[Albert]

general rules of thumb: (manufacturing + raw material costs) x 7 (give or take 1) = american retail price. you would be surprised that most of the profit went to the channel instead of the company that has its logo pasted on the product. tim cook saw this. and begin bulding apple's own channel - apple stores. that's how apple make huge profit while remain competitive.

[NeoandGeo]

Yet you ignore all the other costs he listed plus the etc. part at the end; there are a mountain of patents that have to be paid ranging from hardware though to audio compression and so on. Apple does have high margins, above the industry average of 27%, but it is no where near the claim of the article that the OP posted.

 

Ok, those listed costs and the "etc.' you pointed out apply to the iPod as well. Why is one literally half the cost of the other? Cell companies are working with phone developers to falsely manufacture high prices and keep the prices high when new tech comes out. Don't argue when you fail to comprehend the discussion at hand, makes you look silly.

[DeadEndAccount]

Ok, those listed costs and the "etc.' you pointed out apply to the iPod as well. Why is one literally half the cost of the other? Cell companies are working with phone developers to falsely manufacture high prices and keep the prices high when new tech comes out. Don't argue when you fail to comprehend the discussion at hand, makes you look silly.

 

Again, there are patents that they have to pay on technology relating to mobile phone audio, video etc. which is the reason why there is a price difference.

 

As for your conspiracy about carriers - carriers don't care what you use as long as you're using their service and plenty of it, and of course paying your bill on time.

 

Btw, the fact that you resort to a personal attack at the end of your statement tells me that you've lost the argument and now grasping at straws.

[COKid]

vcfan, on 24 Sept 2013 - 20:10, said:vcfan, on 24 Sept 2013 - 20:10, said:

the only reason why companies can get away charging these high prices of phones is because of multi year contracts, which give the illusion to people that they're getting the phone for only a hundred of two hundred dollars.

 

Cell phone contracts are for chumps, and there are plenty of those around. I have excellent credit, yet I still use a pre-pay plan for my smart phone.

[NeoandGeo]

Again, there are patents that they have to pay on technology relating to mobile phone audio, video etc. which is the reason why there is a price difference.

 

As for your conspiracy about carriers - carriers don't care what you use as long as you're using their service and plenty of it, and of course paying your bill on time.

 

Btw, the fact that you resort to a personal attack at the end of your statement tells me that you've lost the argument and now grasping at straws.

 

So does Apple willingly lose money on each iPod that is sold with identical hardware, minus a cell radio that costs pennies on the dollar? Don't be so naive, you are continuing to look silly and are probably a shill for this BS that gets passed on to consumers so they don't know any better.

[Blackhearted]

An apple product is a hideously overpriced piece of crap? That's not news. What would be news is if apple decided to become a decent company for once and not constantly rip people off by charging them 3+ times what something costs to make.

[ATLien_0]

Seems a lot don't understand basic business and economic principles. There are a lot of extra costs other than the manufacturing that go into the production of these. Also basic economic principles, Apple could sell cheaper, but why if people are still buying them like hot cakes. Test the waters with higher prices till you see a drop off in sales. If people were actually not buying these at their price then Apple might lower the price, until then I wouldn't say they are ripping off people like the poster above. 

[protocol7]

I bet the markup on all those dinky adapter cables Apple sell is way higher.

[fusi0n]

Not really a rip off if people are willing to pay for it.. 

 

with that said, just because it cost $199 to make, you have to take account for all their overhead as well. 

 

It isn't just apple that does, it is most huge companies that sell any type of electronics with the exception of MOST TVs.. TVs have little markup