Thursday, September 22nd, 2016

Find out how much iPhone 7 actually cost to make; you will be shocked

Narada Desk | September 22, 2016 2:06 am Print
As of now the iPhone 6 manufacturing cost is 200$. The earlier versions of the iPhone were much cheaper to produce with the 4s costing 130$ and the 5/5S costing 150$ respectively

It’s important to preface this entire piece by saying that Apple CEO Tim Cook once said that these types of estimates are never ‘anywhere close to being accurate,’ and that they are typically ‘much different than the reality.

Apple makes roughly $500 per iPhone. That’s a margin of over 200%! Quite high in this price sensitive industry.

Apple’s has been ruthless to customers in terms of Pricing.

Agreed, they made an excellent product and brand yet they charge exorbitantly high prices which make iPhone out of reach for many. And that what makes it exclusive!

According to a teardown report from research firm IHS, the components and manufacturing cost of a 16GB iPhone 6 cost Apple $200.10.”

Sounds unbelievable, but it’s true. IHS Technology, global researchers and analysts of technology, did a study on the actual cost of manufacturing an iPhone 6 Plus. What they found will make you feel cheated. Might even make you shed a tear.

Apple apparently sells each model of iPhone 6 Plus at an eye-popping 300% profit!

Which means, the cheapest model of iPhone 6 Plus that is sold at Rs 51,000 (approx.) actually costs only Rs 17,000 to make!

The materials used in making a 16 GB iPhone 6 Plus actually costs only Rs 15,800. If you include the manufacturing costs, it comes to Rs 17,000.

The most expensive part of the phone happens to be the screen which now comes with the new 3D-touch technology. The cost of one screen – Rs 3,580.

Next comes the camera. The cost of manufacturing both front and the back camera (8 megapixels and 12 megapixels respectively) is merely Rs 1,530.

There’s a reason why Apple does not offer expandable memory. And this is where they actually make the most of their device – the cost of adding 1 gigabyte of memory on the phone is as low as Rs 25!

The cost of 16GB memory in an iPhone 6 Plus is Rs 400 while the cost of 64 gigs of memory is Rs 1600. So ideally, the difference between a 16 GB iPhone 6 Plus and a 64 GB iPhone 6 Plus isn’t more than Rs 1200 but users end up shelling out around Rs 7000 more for the 64 GB model.

With the base model phone running $649, this gives Apple an expected profit of $424 for each device sold, a 189 percent markup. Of course, this doesn’t factor in outside costs, like research and development, marketing or events.

All told, per-device profit is probably much lower than the $424 estimate and these estimates could be wildly inaccurate anyway. But, it’s always fun to peek through the looking glass.

But while Apple is simply doing business, what’s really disheartening to know is that the workers who take about 24 hours to manufacture an iPhone make a negligible amount of Rs 120 per hour for their labour.

Even if you add all of Apple’s expenses including R&D, labour, shipping, licensing, taxes, marketing and other territory costs, the margin between the cost price and the selling price still remains astronomical.