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10-20-2011, 11:03 AM #1
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!
10-20-2011, 11:19 AM #2
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
10-20-2011, 11:21 AM #3
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...
10-20-2011, 11:26 AM #4
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.....
10-20-2011, 11:29 AM #5
10-20-2011, 11:32 AM #6
10-20-2011, 11:34 AM #7
10-20-2011, 11:35 AM #8
They also have to make back all the money they spent on siri
10-20-2011, 11:40 AM #9
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.
10-20-2011, 11:46 AM #10
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.
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.
Last edited by realisticmind1; 10-20-2011 at 11:50 AM.I'd rather be on two wheels.
10-20-2011, 12:03 PM #11
10-20-2011, 12:44 PM #12
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 ..
10-20-2011, 12:46 PM #13
Relax guys, it is what it is. This article covers how much it cost to put together the iPhone 4s. Nothing less, nothing more.
10-20-2011, 01:04 PM #14
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.PRAETORIANNI NONNUMQUAM IN PROELIO NUMQUAM IN BELLO SUPERANTUR
10-20-2011, 01:07 PM #15
"Well that's what we're going to cover today"
Are we in third grade?
10-20-2011, 01:45 PM #16
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.
10-20-2011, 01:47 PM #17We 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, Apples 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.
10-20-2011, 02:26 PM #18
Subsidies aside doesn't the store need make some margin on sales?
10-20-2011, 02:36 PM #19
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.
10-20-2011, 03:01 PM #20
Dammm. i thought it cost apple 50 bucks to make 1 iphone. the price is right.