According to analysis from research firm IHS Technology, the iPhone 6s Plus costs Apple an estimated $236 to make — but nets the company an impressive $749 when it goes on sale.
That’s $513 markup per handset, if you’re keeping track at home.
It’s worth noting that IHS’s figures don’t take into account other Apple expenses, including shipping, warehousing, R&D and marketing. Apple has certainly ramped-up its spend in several of these areas over recent years, but it’s still an impressive indication of the kind of margins Cupertino enjoys.
As a comparison, rival company LG makes just 1.2 cents in profit for each smartphone it sells.
Check out the estimated breakdown of costs below:
Perhaps the most intriguing figures are the fact that flash memory is very cheap — at just 35 cents per gigabyte. That means that, despite charging $100 more for a 64GB iPhone than a 16GB one, Apple spends just $17 extra in component costs.
The new A9 processor meanwhile costs around $22, while the advanced 3D Touch display sets Apple back approximately $52.50 — which is made $10 more expensive than it would otherwise be due to the addition of a third layer to each screen to read the changes in pressure.
Source: Re/code
Luke Dormehl is a U.K.-based journalist and author, with a background working in documentary film for Channel 4 and the BBC. He is the author of The Apple Revolution and The Formula: How Algorithms Solve All Our Problems … and Create More, both published by Penguin/Random House. His tech writing has also appeared in Wired, Fast Company, Techmeme and other publications.
18 responses to “Apple rakes in $513 for each iPhone 6s Plus it sells”
Again you are talking about raw materials! no manufacturing no, research, no development, no packaging, no accounting, no this, no that, no the zillion things you need to do to get such devices out in the market!
So basically this is a link bait article with a completely wrong title begging for clicks! same story every year!
Take it easy, “Paris.” You’re going to give yourself an aneurysm. Also, I love your pink and purple tie and shirt combo!
Well I am not an internet thought guy so ….
Yep, it’s the never-ending misleading tale.
Add in the cost of Support, Warranty exchanges, DOA units, iCloud services,on going Software/OS development for future releases during the product’s lifespan, and yeah, the R&D and SG&A and Taxes.
These guys just try to conjure up reasons to give people that wrong impression. Apple, last year only had a 21.6% Net Profit to Gross Sales. So for every $1 Apple bring in, they only retain about $.22, which is certainly more than their hardware competitors, but that’s not Apple’s fault their competitors don’t know how to manage a company.
Or overcharge rabid users eh?
Apple pays more for components because they demand the cream of every component. They demand much more testing be done and little things that other makers don’t care about Apple rejects. When you skim the best 20% of what is made in a particular production run you pay a premium on that, as the additional rigorous testing also costs more. I know people in the industry who have to deal with Apple and I know this to be so. You cannot simply price out components by part number in an Apple device and come up with total cost. The ignorance in this sort of article screams incompetence related to how things actually work.
Apple is just another fab-less electronics company. They have contracts with mfrs that build their devices and that is just like every other. To imagine that Apple is using the cream of the crop in components that are somehow blessed and not regular production runs is just not so. They have QA and testing and defects rejection just like everyone else. They use some premium parts for sure. I do agree that a BOM of parts is not reflective of the other R&D, support, and costs that reflect the end price. But it is entirely true that Apple’s margins on devices is excess compared to others. Then again, if you’ve drank the koolaide and are willing to pay, then the price is what the market will bear. If I were Apple, given the clamour for their products and willingness to pay, I’d raise the margins even more.
I know people who work directly with Apple. That you deny reality in favor of what you think must be so is your choice. You are the one in Kool-Aid denial. How business is usually done and how Apple does business are not the same thing.
To be sure, Apple makes a lot of profit. That is not at all my point. When they demand drives be tested four times more than anyone else and have a controller added it costs more. The part number is not changed even with that extra littke part added. Apple pays more for extra work done.
I really had hoped that Cult of Mac could do better than trashy link bait like this.
If you’re going to mindlessly spew out the same meaningless stats as thousands of other blogs, you really are giving me no reason to white list you on my content blocker.
You writers actually need to put some thought and effort into your stories. Otherwise we may as well just read this on twitter.
well minus ( Genuis Bar chaps +iOS development + Retail Store’s + Design chaps + for years to come support + All the nice People at Apple)
That S on the back of the new iPhones is atrocious! Glad I upgrade on the full upgrade cycles.
Bend over
Back under your bridge, Mr Troll. Your grammar could use some work, too.
I love these articles that focus on materials and skimp over the real cost of these devices… R&D not the least of them. This technology doesn’t just happen and its not cheap. More idiot link bait… I guess commenting on this only supports these morons.
What a disgraceful article – it took some sensible, honestly-reported work from ReCode and degraded it – it turned a sensible, interesting “cost of raw materials” article into a bogus and misleading “excess profits” story, completely omitting the cost of software, iCloud, Apple stores, Apple salaries, marketing, packaging, distribution, etc. etc. Luke, it may be time to return to “documentaries” – there is no value added by your journalism if you’re just going to intentionally mis-state a well-reported piece of actual journalism just to feed your own pathetic click-bait aspirations.
Come on Cult of Mac…why not do some legit reporting and writing, and shatter the mold of all of the other blog sites? Be different and actually produce an article that is fully factual and not leaving out more than half of the story. You’re smart enough to know that Apple isn’t “raking in $513 for each 6S Plus it sells”. This isn’t the only time you all take the easy way out and promote click bait articles. I expect better than this. Pathetic.
$749 is the MSRP and Apple only gets that when you buy direct. The phone companies are probably buying them for around $400 so they get to jack up the prices to $750. When you get a “discounted price” for buying a device on contract with a phone company the phone companies are still selling them at profit at the subsidized price.