$200. That’s the cost to Apple to manufacture an iPhone 6 with 16GB of RAM and its big brother (the iPhone 6 Plus 16GB) is only $16 more, this according to CNET’s source, IHS Research. Teardown.com clocks them in a little higher at $227 for the 6 and $242 for the 6 Plus.
Whichever number is more accurate it is clear that Apple’s profit margins are still the highest in the smartphone market and they do not intend to lower those any time soon. Take a look at the charts below courtesy of teardown.com and IHS Research. You can hit the CNET or Yahoo link at the bottom for a more detailed analysis of sales.
According to CNET, Apple’s profit margins sit at about 70% for every device they sell, which is HUGE! Having worked in retails sales in the past one of the general rules for my company was a 30% gross across the store. There were plenty of loss leaders but for the most part we maintained a 30% gross on all items sold. The company also pushed its store branded items very heavily which cost much less to produce and brought in a 70-80% gross. This is basically what Apple is doing, keeping costs down and profits high and it allows them to continually be a leader in the market.
Apple’s marketing and public relations teams are some of the best in the world and they’ve done a brilliant job of deflecting any negative press towards the brand and refocusing the public perception on what they want them to see. The entire iCloud celebrity nude photo debacle only lasted a week at most and the public has forgotten. Now we’re on our second day of iPhone’s bending in pockets and we’ll probably have forgotten that by weeks end. Whatever Apple is doing, it’s doing it right. Arguments can be made for and against their business practices, product design, customer service and a plethora of other things but there is no denying they’re making money and until people stop buying iPhones, they will likely continue making money.
Update: As some readers have pointed out, these numbers only reflect the cost of manufacturing and do not take into account marketing costs, salaries, R&D and other overhead.
Featured image courtesy money.cnn.com.