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  • How Much Does it Cost to Build An iPhone 4S?

    The new iPhone 4S has a lot of new hardware in it that is multiple times more powerful than the iPhone 4.

    Have you ever thought to yourself, "How much money does Apple make on these things"? That's a good question. With a contract, an up-to-date iPhone costs as little as $199. The unlocked, off-contract iPhone costs as little as $649. The models go up in price depending on the memory that you select: $299/32GB, $399/64GB $749/32GB unlocked, $849/64GB unlocked.

    Many of you will be thinking, "What a rip off, I can buy a computer for that price." While your statement would be very true and hard to argue against, Apple is known for their tough prices. But with a mere smartphone costing almost $1000, it sure makes us wonder just how much money it costs for Apple to build these smartphones. Well that's what we're going to cover today.

    The hard number crunching shows that the iPhone 4S costs 49 more to make than the iPhone 4. Yes, with an improved 8 megapixel camera, dual core A5 processor, dual core GPU, and dual radio antenna, the iPhone 4S is significantly identical in pricing to the iPhone 4. But how much does it cost to build, exactly?



    The chart shows the prices that Apple pays to build each iPhone 4S. The base model iPhone 4S costs $196 total to build, the 32GB model costs $215 total to build, and the 64GB model costs $254 total to build. These are the prices of the estimated bill of materials per device (BOM). The NAND flash memory is usually the most expensive individual part of the device. The individual parts that make up the foundation of the iPhone 4S are notably cheap. That's because Apple buys in bulk at factory direct prices. But, once Apple gets their hands on the devices they install their iOS 5 operating system and do what every company does; make money. Another part of the pricing has to do with licensing, so that will add to what you pay too, just as a monthly cellular bill will.

    So Apple can build a 64GB iPhone 4S for 70% less than you pay for the unlocked version. That's a huge margin. The fact that people buy these devices for such astounding prices illuminates how Apple has earned their respect in build quality and customer satisfaction; but that, my friends, is all part of the job. To bring a product to the market at such amazingly high prices (even though it's built at 30% of the retail price), the only way that someone would ever dish out that kind of money is if they were sure that the product they were getting was absolutely flawless. Apple has earned a good name in designing products. They offer quality customer support along with long-lasting materials in their devices (when handled properly, of course). So is that the reason why we pay so much for these devices?

    We can look further at how Apple's marketing works. Their commercials are so simple. It gives us a humble feeling that the device will simplify our lives. People try the devices and love them, they show their friends, they tell their work colleagues, they spread the word without Apple ever having to lift a finger. Apple has it made; they've earned a good name and now their customers advertise for them.

    So, the iPhone 4S is only costs half of a dollar more to make than the iPhone 4; about $196. With all of those improvements in hardware, that's pretty jaw-dropping. Do you think Apple is a master of marketing? Share in the comments below!

    Sources: Gigaom
    This article was originally published in forum thread: How Much Does it Cost to Build An iPhone 4S? started by Anthony Bouchard View original post
    Comments 31 Comments
    1. Waaasobe's Avatar
      Waaasobe -
      that is just individual unit cost. you have to factor in the employees wages they have to pay they have to pay to ship them they have to pay people to do all sorts of things. so the margin of profit for apple is infact slightly lower
    1. bigliquid530's Avatar
      bigliquid530 -
      Well I know they have to pay workers ect...

      But almost a grand for any type of phone is ridiculous if you ask me...

      Don't get me wrong I love my iPhone 4 but definitely not worth a grand, plain and simple...
    1. Seb..'s Avatar
      Seb.. -
      also in the UK $254 = 161.19 and the unlocked 64 gb at the apple store is retailing for 700. I understand they are a company but it is still sickening.....
    1. Poseidon79's Avatar
      Poseidon79 -
      Quote Originally Posted by Waaasobe View Post
      that is just individual unit cost. you have to factor in the employees wages they have to pay they have to pay to ship them they have to pay people to do all sorts of things. so the margin of profit for apple is infact slightly lower
      CNET reported that it costs an estimated $8 per unit to assemble.
    1. GeoffS4's Avatar
      GeoffS4 -
      Quote Originally Posted by Waaasobe View Post
      that is just individual unit cost. you have to factor in the employees wages they have to pay they have to pay to ship them they have to pay people to do all sorts of things. so the margin of profit for apple is infact slightly lower
      True, and you kept it vague. But to the readers, bear in mind that additional corporate cost(s) is a variable cost based on the number of units sold. As the number of units sold increases, so does that per unit (variable) cost drop.
    1. Anthony Bouchard's Avatar
      Anthony Bouchard -
      Quote Originally Posted by Poseidon79 View Post
      CNET reported that it costs an estimated $8 per unit to assemble.
      Yes. On the chart, that would be the manufacturing costs. The other prices go toward actually obtaining the materials.
    1. klouud's Avatar
      klouud -
      They also have to make back all the money they spent on siri
    1. Bluprint's Avatar
      Bluprint -
      Quote Originally Posted by Waaasobe View Post
      that is just individual unit cost. you have to factor in the employees wages they have to pay they have to pay to ship them they have to pay people to do all sorts of things. so the margin of profit for apple is infact slightly lower
      just shut it..

      employee wages? that's laughable, because in china they get paid like what? 10 cents an hour.

      or did you mean those underpaid employees at the apple retail store, each worker generates about 100k each month at 8 dollars an hour.

      c'mon you gotta be joking man. ppl who work for apple take that personal believe me.
    1. realisticmind1's Avatar
      realisticmind1 -
      Quote Originally Posted by Poseidon79 View Post
      CNET reported that it costs an estimated $8 per unit to assemble.
      Right, but he is also talking about the actual Apple employees. Apple has to make enough on their devices to be able to cover all of the corporate salaries, benefits, taxes and everything else that goes with employing high caliber professionals. Not to mention, it also has to cover the expenses of each and every Apple store and employee working there as well.

      It may cost $8/unit for the factories in china to put out a single device, but that does not factor in everyone who actually works at Apple.

      Quote Originally Posted by Bluprint View Post
      just shut it..

      employee wages? that's laughable, because in china they get paid like what? 10 cents an hour.

      or did you mean those underpaid employees at the apple retail store, each worker generates about 100k each month at 8 dollars an hour.

      c'mon you gotta be joking man. ppl who work for apple take that personal believe me.
      I'm pretty sure the Apple retail employees are making way more than minimum wage...

      And don't forget the engineers. How much do you think they are paid? Or the money going to Tim Cook and the rest of the board? How about just the admins and in house HR employees? The legal team? How about the amount of money going to the share holders in dividends? The cost of actually owning\renting the buildings all these employees work in? You aren't looking at the whole picture.
    1. markydias's Avatar
      markydias -
      Quote Originally Posted by realisticmind1 View Post
      Right, but he is also talking about the actual Apple employees. Apple has to make enough on their devices to be able to cover all of the corporate salaries, benefits, taxes and everything else that goes with employing high caliber professionals. Not to mention, it also has to cover the expenses of each and every Apple store and employee working there as well.

      It may cost $8/unit for the factories in china to put out a single device, but that does not factor in everyone who actually works at Apple.



      I'm pretty sure the Apple retail employees are making way more than minimum wage...

      And don't forget the engineers. How much do you think they are paid? Or the money going to Tim Cook and the rest of the board? How about just the admins and in house HR employees? The legal team? How about the amount of money going to the share holders in dividends? The cost of actually owning\renting the buildings all these employees work in? You aren't looking at the whole picture.

      I wish there was a rating system for these comments. I would definitely +1 this man right here.
    1. flintoff's Avatar
      flintoff -
      wow pplz are complaining about how apple is ripping off costumer. yet everybody goes to apple on first day of the launch and hand over bunch of money ..
    1. mmaboi21's Avatar
      mmaboi21 -
      Relax guys, it is what it is. This article covers how much it cost to put together the iPhone 4s. Nothing less, nothing more.
    1. dennder's Avatar
      dennder -
      Quote Originally Posted by realisticmind1 View Post
      Right, but he is also talking about the actual Apple employees. Apple has to make enough on their devices to be able to cover all of the corporate salaries, benefits, taxes and everything else that goes with employing high caliber professionals. Not to mention, it also has to cover the expenses of each and every Apple store and employee working there as well.

      It may cost $8/unit for the factories in china to put out a single device, but that does not factor in everyone who actually works at Apple.

      I'm pretty sure the Apple retail employees are making way more than minimum wage...

      And don't forget the engineers. How much do you think they are paid? Or the money going to Tim Cook and the rest of the board? How about just the admins and in house HR employees? The legal team? How about the amount of money going to the share holders in dividends? The cost of actually owning\renting the buildings all these employees work in? You aren't looking at the whole picture.
      Too true to be heard by apple-haters, however, in the sight of apple's quarterly reports this company does sell these devices priced with huge margins, just not that huge as would this article suggest.
      And, you forget that these parts are static costs (or those that vary very little because quantities produces are enormous already). All the staff wages and other costs to run the enterprise are being diminished with each device sold, since the more devices there are, the more profit from each additional one sold is being earned, don't you agree?

      I just wish that these prices were slightly less steep, 15% price-drop would be enough to make the sales broader and devices more attractive even to those who does want to buy them because of the price, but... who am i to judge apple sales? Maybe the 15% price drop won't just bring that many additional customers to make it generate higher profits.
    1. iphoneadam's Avatar
      iphoneadam -
      "Well that's what we're going to cover today"

      Are we in third grade?
    1. RobertZama's Avatar
      RobertZama -
      Lets not forget that this is for hardware parts only, the technology behind it takes a lot of resources to put it together in the first place. also a lot of money go to advertising, patent royalties, and paying all the employes from the assembly line to top corporate employes and think about how much money go into software development.
    1. Perceptum's Avatar
      Perceptum -
      “We are thrilled with the very strong finish of an outstanding fiscal 2011, growing annual revenue to $108 billion and growing earnings to $26 billion,” said Tim Cook, Apple’s new CEO. “Customer response to iPhone 4S has been fantastic, we have strong momentum going into the holiday season, and we remain really enthusiastic about our product pipeline.”
      With the huge markup Apple gives its products, isn't $108 billion a little low?!
    1. Dranon's Avatar
      Dranon -
      Quote Originally Posted by Waaasobe View Post
      that is just individual unit cost. you have to factor in the employees wages they have to pay they have to pay to ship them they have to pay people to do all sorts of things. so the margin of profit for apple is infact slightly lower
      OK but selling these at retail also means the STORE has to make a profit! Whether the Apple store or the cell phone store. ATT, Verizon, Sprint etc. I wonder how much margin is there?? I know they subsidize on contract but I wonder how much does the store have to buy them for from Apple? AND how much is the subsidy on these? Like when does ATT see profit on a contract after the subsidy? 2 months 6 months a year??
    1. baskie's Avatar
      baskie -
      Not read the above comments, as they're mostly people ******** about the cost.

      To those, I've just one question: who put the gun to your head and made you buy it?

      No one? Thought so.

      And, as anyone with a brain will know, the cost is in R&D for a product like the iPhone, not the manufacturing.
    1. Jarolin Vargas's Avatar
      Jarolin Vargas -
      Dammm. i thought it cost apple 50 bucks to make 1 iphone. the price is right.
    1. GenesisDH's Avatar
      GenesisDH -
      Almost every major label smartphone out there right now retails, without subsidy, at or more than $600. Nexus series sells $500+ no-contract, most first-run HTC devices sell for 600-700, and Nokia sells their newer N-Series phones unlocked for at least $500. Do you think they don't have high profit margins?

      That's just how it is.