Comments on: iPhone Costs Apple $220 To Manufacture

By: Peter Ha

Peter Ha — Tue, 03 Jul 2007 03:44:28 +0000

Why thank you, Tom.

By: Chuck

Chuck — Mon, 02 Jul 2007 23:57:41 +0000

Seems to totally resonable, and to expect anything better is ignorance of how the manufacturing buisness works.

So lets try some totally off the wall, out of my butt numbers.

That $200 estimate is price of parts only The real cost includes labor, even cheap labor adds a significant amount, then testing the built device at the factory, packaging the device (yes that nice box with strap costs something), shipping from Asia, import duties, trucking to warehouse from the port, cost of warehousing, cost of local incoming quality control, cost to ship from warehouse to retailer. Cost of dealer support, replacement units etc. The real finished cost to Apple is more likely between $270 and $325.

If Apple only marks up by 1.5 times then 325 * 1.5 = 488 dealer cost. So if the dealer walks away with 699-488=$111 per unit and and one particular dealer had 50 units to sell on Friday, they made a whopping $5.5K for their trouble, hardly enough to keep the lights on. Just because the dealer in this case is an Apple store makes no difference, they still have to sell enough to make themselves profitable, and Apple stores are probably much more expenisve to run than a Best Buy.

Apple makes $162 per phone, 162*525000 = $85M. Ok, now thats not to bad, probably has not paid for their investment, but that will come.

By: Tom

Tom — Mon, 02 Jul 2007 23:55:06 +0000

mroach is right on. This leads people to believe that it only cost Apple 200 or 220 to make the iPhone and that everything else is profit. That is far from the truth. It likely cost them much more with all of their fixed costs (r&d, advertising, and overhead). Im sure right now, Apple isn’t making much per unit. When they start selling many more, each phone will have a greater profit margin.

Peter Ha you are retarded.

Sam, you are cool.

By: Sam Alexander

Sam Alexander — Mon, 02 Jul 2007 22:27:57 +0000

If we’re looking at it that way, why don’t video games cost a dollar? Or dinner at a 5-star restaurant cost 15 bucks?

This post totally disregards all of the other factors that it takes to make a product.

By: NW Guy

NW Guy — Mon, 02 Jul 2007 22:01:17 +0000

Hate to bring sanity to the discussion but the figure you state is Apple’ cost of goods sold (minus the assembly labor). Mroach is detailing out all of the R&D and marketing, figures that do add up.

Now let’s take a look at software vendors and their cost of goods sold…hhmm…box; manual..oh wait none of those anymore. Download cost…$0.10??

Who has the better end of that deal??

By: Peter Ha

Peter Ha — Mon, 02 Jul 2007 21:45:01 +0000

The same could be said for your reaction as well, mroach. This is just a comparison between the manufacturing costs of the iPhone and how much it retails for, nothing else.

By: mroach

mroach — Mon, 02 Jul 2007 21:28:32 +0000

These reports are moronic, or at least they way people read them. How about the man hours that went into development, testing, writing software, etc? Is that just free? How about advertising and everything else? People are just dense.

By: Peter Ha

Peter Ha — Mon, 02 Jul 2007 21:26:13 +0000

What if I’m wearing nothing at all, plankton?

By: electro^plankton

electro^plankton — Mon, 02 Jul 2007 21:23:16 +0000

The clothes you’re wearing right now probably cost less than $2 U.S. to make but how much did you pay for it? It’s the way of capitalism. We can’t run from it. People just love making money.