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Apple Employees to Receive 50% Off Apple Watch and Apple Watch Sport Models, $550 Off Gold Model

spectrumfox said:
According to a teardown report from research firm IHS, the components and manufacturing cost of a 16GB iPhone 6 cost Apple $200.10. The device is selling for $649 in the U.S. without a contract with a wireless carrier. That gives the device a profit margin of about 69%.

https://www.google.com/webhp?sourceid=chrome-instant&ion=1&espv=2&ie=UTF-8#q=real cost of iphone 6

I don't think I'm all that confused. I do appreciate your concern though.
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You mentioned that you did not understand how a business can charge such a profit margin to cover ALL the cost in a business (and how it is not fair) and I and some other people tried to point out to you that your understanding of accounting is flawed. THAT was what we were talking about. Not about the actual size of the profit margin.

No one here is disputing that Apple's profit margin is high.
 
spectrumfox said:
Yet that was my point from the start. You can argue with me for the sake of arguing if it makes you feel better.
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No, your point was that the profit margin is TOO high and that it should be lower, because you think the products are overpriced.

You don't need 55 posts to discuss that Apple's profit margins are high because we all know that and agree with it.
 
peterdevries said:
No, your point was that the profit margin is TOO high and that it should be lower, because you think the products are overpriced.

You don't need 55 posts to discuss that Apple's profit margins are high because we all know that and agree with it.
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That is correct. Thank you for summarizing that for us.
 
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ZCT said:
You know there are online courses you can take in business studies that will help you a lot. It can't be fair to go through life so ignorant of how the world works.

When a project like the Apple Watch comes along a for profit company has to consider EVERY cost associated with that project, from R&D, to designing and building the display cases, everything. Someone even calculated how many square feet of the store would be repurposed for this project, because in retail you have to consider the revenue per square foot, to maximize the efficiency of the retail space that you have.

A company like Apple has to figure out every last dime that was spent making Apple Watch happen. Figure out how much they will be able to manufacture each device for, and how much profit they will need to make to make the whole project worthwhile.

You can't just say that large chunks of the cost of this project are 'the cost of doing business.' The world is not like that at all. If Apple spent $100m bringing this to market, and another $10m in staff training and rearranging the stores. They can't just say, oh well that $10m is the cost of doing business.

As a company you have to make back what you spent, and make a profit. That's kind of the point of a company. If businesses operated as you suggest, they would go bankrupt.

Apple is not a benevolent charity with a desire to issue every man, woman and child with an Apple Watch for free.

They are a company who invested heavily to make a product, marketed the product, trained their staff to sell the product, figured out how to make it on budget on a huge scale to a specific quality. Now they need to recoup all of that investment, and walk away having made a profit overall on the sale of Apple Watches.

This is business 101. It's how business works. I'm not sure why you are so confused.
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Exactly right. "cost of doing business" are things like fees for accepting credit cards, losses due to shoplifting and returns, etc. EVERYTHING involved in bringing a product to market figures into the price. As well as what market research has determined to be the price people are willing to pay. Consumer product companies do a lot of research to find out what people are willing to pay for things. And that research is expensive to conduct.
 
There seems to be some huge margin available...50% off will not be completely achieved by subsidization given the potential large number of employees that will get it.
 
laurim said:
Exactly right. "cost of doing business" are things like fees for accepting credit cards, losses due to shoplifting and returns, etc. EVERYTHING involved in bringing a product to market figures into the price. As well as what market research has determined to be the price people are willing to pay. Consumer product companies do a lot of research to find out what people are willing to pay for things. And that research is expensive to conduct.
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The "cost of doing business" is much less than the profit Apple makes from every iPhone sold. You can say that all of that is expensive, but then consider how many millions of iPhone's that Apple sells in a year, or even in a quarter.

The "cost of doing business" suddenly becomes more like a drop in the bucket.
 
CFreymarc said:
With the amount of profit they have, they can easily afford to give one to every employee. This half off to employees is bull.
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I knew there would be a few who would look a gift horse in the mouth. You just can't please some people. If they gave every employee a free Sport version someone would whine that they want a free SS version. If it were up to me, I would fire anyone who complained that way.

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spectrumfox said:
The "cost of doing business" is much less than the profit Apple makes from every iPhone sold. You can say that all of that is expensive, but then consider how many millions of iPhone that Apple sells in a year, or even in a quarter.

The "cost of doing business" suddenly becomes more like a drop in the bucket.
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Neither one of us knows Apple's finances. I only know what little I know from working in consumer research at Procter & Gamble. The main point is still true. A product's cost to manufacture is the sum total of everything it took to get it to market, not just the raw materials and some research. Everything down to the package it ships in plays into the price.
 
spectrumfox said:
True, but we can make educated guesses based on information publicly available to us.
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Are you also well-versed in typical margins? Products are routinely sold at prices well-above their manufacturing cost. Most items are sold at at least twice the cost. You also have to take into account the margin they have to leave for stores like Best Buy. I've read that a Rolex probably costs about $500 to make so is the markup on an Apple Watch really that hard to fathom?
 
laurim said:
Are you also well-versed in typical margins? Products are routinely sold at prices well-above their manufacturing cost. Most items are sold at at least twice the cost. You also have to take into account the margin they have to leave for stores like Best Buy. I've read that a Rolex probably costs about $500 to make so is the markup on an Apple Watch really that hard to fathom?
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There's one major difference between a Rolex and an Apple Watch that immediately comes to mind.

A Rolex won't become obsolete in two years and won't require you to buy another one to keep up with OS upgrades. A Rolex deserves its markup because its built to last lifetimes and its recommended service repair is once every 4-5 years.
 
spectrumfox said:
There's one major difference between a Rolex and an Apple Watch that immediately comes to mind.

A Rolex won't become obsolete in two years and won't require you to buy another one to keep up with OS upgrades. A Rolex deserves its markup because its built to last lifetimes.
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But a Rolex only does one thing. So it's purchased solely as a statement of wealth (or by someone trying to look wealthy, which is sad). An Apple Watch can also only tell time for as many years as the battery still takes a charge. An Apple Watch is exponentially more useful than a Rolex and therefore is a better value for the money. A Rolex is only as useful as any other piece of jewelry. Rolex's aren't even that valuable over the long term. They don't hold their value as much as some people like to think.
 
laurim said:
Neither one of us knows Apple's finances.
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spectrumfox said:
True, but we can make educated guesses based on information publicly available to us.
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Apple's finances are publicly available from their website. Educated guesses are not necessary. If you know a little bit about accounting you can very easily read how much of their gross profit goes towards cost of goods sold, amortization and depreciation etc. You can even look up how much remains at the bottom line and is their net profit. It's quite easy.

What spectrumfox says is essentially correct. The profit on their products far exceeds the costs that Apple makes. But that is the number one reason for Apple to be in the business. You can argue that it's profit is too large, but Apple has to walk a tightrope between customer expectations and demands and shareholder requirements. Apple cannot exist and produce its products without either of the two. And it is doing a brilliant job walking that tightrope. As I pointed out before millions upon millions of people happily front the cash and buy Apple products, and Apple keeps building its cash pile for the shareholders and future investments. Great job, win - win. It is truly a model business, that is mentioned in any business course on this planet currently.
 
laurim said:
But a Rolex only does one thing. An Apple Watch is exponentially more useful than a Rolex. A Rolex is as useful as any other piece of jewelry. Rolex's aren't even that valuable over the long term. They don't hold their value as much as some people like to think.
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An Apple Watch may be exponentially more useful, but its lifespan is much shorter than a Rolex. So at that point, the buyer has to ask themselves if they want to purchase something with longevity that provides only the basics, or purchase something that does more but with a much shorter lifespan.

And one could argue that people don't buy Rolex watches for their resale value. They are bought to be passed down from generation to generation and adored as a symbol.
 
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peterdevries said:
Apple's finances are publicly available from their website. Educated guesses are not necessary. If you know a little bit about accounting you can very easily read how much of their gross profit goes towards cost of goods sold, amortization and depreciation etc. You can even look up how much remains at the bottom line and is their net profit. It's quite easy.

What spectrumfox says is essentially correct. The profit on their products far exceeds the costs that Apple makes. But that is the number one reason for Apple to be in the business. You can argue that it's profit is too large, but Apple has to walk a tightrope between customer expectations and demands and shareholder requirements. Apple cannot exist and produce its products without either of the two. And it is doing a brilliant job walking that tightrope. As I pointed out before millions upon millions of people happily front the cash and buy Apple products, and Apple keeps building its cash pile for the shareholders and future investments. Great job, win - win. It is truly a model business, that is mentioned in any business course on this planet currently.
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Are those public finances broken down by what costs are for what product? I don't think so. Some products are sold at a loss. Like the software they now give people for free. Other products make up for those loss leaders. I don't know why it's mysterious that a company would want to charge as much as they think they can for their products. They're not a charity for crying out loud. They don't owe any of us anything. Sheesh, I'm a liberal and can understand that.
 
FeelingGood said:
What does the pain of the constant rejection from the cool kids and hot babes you experienced in high school has to do with my reply? What the frack does this even mean?
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I was more referring to how you call people "bro" and "losers" and mix words like "dung" in with names. Lots of jocks did stuff like that. Reminds me of high school.

However, I do expect most people to grow out of that by the time they graduate.
 
These discussions around the cost and profit margin of Rolexes and Apple Watches are futile, because there is no logic to it.

The only thing that matters is the "willingness to pay" of the consumer. For both the Rolex, the Apple Watch (including the Edition) there are thousands if not millions of people's prepared to front the money to buy one. Regardless of the underlying value retention, upgradability, marking or whatever.

As long as there are consumers willing to pay a price for something there will be companies prepared to build the product. Easy as that.

Immediately when Apple lowers their margins and starts addressing a different segment, a new company will jump up to take its place.
 
spectrumfox said:
An Apple Watch may be exponentially more useful, but its lifespan is much shorter than a Rolex. So at that point, the buyer has to ask themselves if they want to purchase something with longevity that provides only the basics, or purchase something that does more but with a much shorter lifespan.

And one could argue that people don't buy Rolex watches for their resale value. They are bought to be passed down from generation to generation as adored a symbol.
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Well, I think Rolexes are old man watches. Would never wear one, even a ladies version, and wouldn't expect someone of a totally different generation to want to wear my hand-me-down that is bound to be viewed by them as an old-lady watch.
 
laurim said:
Are those public finances broken down by what costs are for what product? I don't think so. Some products are sold at a loss. Like the software they now give people for free. Other products make up for those loss leaders. I don't know why it's mysterious that a company would want to charge as much as they think they can for their products. They're not a charity for crying out loud. They don't owe any of us anything. Sheesh, I'm a liberal and can understand that.
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Did you read my comment properly at all?
 
spectrumfox said:
That's your opinion, and you're of course welcome to it.
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Wow, brilliant! Next time I am too lazy, too tired (after all, you did spend most of your day replying endlessly trying to prove others wrong) or simply unable to provide any facts to back up my position, I'll just copy and paste that gem and call it a day. Just brilliant. Dam.
 
peterdevries said:
These discussions around the cost and profit margin of Rolexes and Apple Watches are futile, because there is no logic to it.

The only thing that matters is the "willingness to pay" of the consumer. For both the Rolex, the Apple Watch (including the Edition) there are thousands if not millions of people's prepared to front the money to buy one. Regardless of the underlying value retention, upgradability, marking or whatever.

As long as there are consumers willing to pay a price for something there will be companies prepared to build the product. Easy as that.
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We are not sure how willing people are to pay the price for the Apple Watch, it hasn't even gone on sale yet so you're just guessing that there will be a big demand.

That said, I'm not expecting it to be a flop. :D
 
FeelingGood said:
Wow, brilliant! Next time I am too lazy, too tired (after all, you did spend most of your day replying endlessly trying to prove others wrong) or simply unable to provide any facts to back up my position, I'll just copy and paste that gem and call it a day. Just brilliant. Dam.
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Glad I could help, bro.

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OllyW said:
We are not sure how willing people are to pay the price for the Apple Watch, it hasn't even gone on sale yet so you're just guessing that there will be a big demand.

That said, I'm not expecting it to be a flop. :D
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I'm not expecting it to flop either. But I do think the initial numbers aren't going to reach Apple's high sales expectations.
 
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