Apple overcharging for the iPhone?

EssentialParado

macrumors 65816
Original poster
Feb 17, 2005
1,154
6
Why is Apple charging $750 for the iPhone when the new iPad + 4G costs only $630?

Based on some quick calculations based on the price of an iPod Touch (which is essentially an iPhone without the phone part), and the price of an iPad 4G (which is an iPad with the phone part), the iPhone 4 is $220 more expensive than it should be, and the iPhone 4S is $420 more expensive than it should be!

The price discrepancy seems to be supported by the iSuppli teardown component estimate of the iPhone 4S, which was $188, and the new iPad + 4G, which is $364 (double that of the iPhone 4S).

So if we conclude that Apple are unnecessarily overcharging on the iPhone, any theories why? Or is it simply "because they can"?
 

r.j.s

Moderator emeritus
Mar 7, 2007
14,927
35
Texas
What about R&D, software development, labor, etc ...

Those "cost breakdowns" don't account for any of that.
 

EssentialParado

macrumors 65816
Original poster
Feb 17, 2005
1,154
6
What about R&D, software development, labor, etc ...

Those "cost breakdowns" don't account for any of that.
You think R&D, software development, labor costs make the iPhone substantially more expensive than the iPad? That makes no sense to me. Surely they'd be roughly on par?
 

r.j.s

Moderator emeritus
Mar 7, 2007
14,927
35
Texas
You think R&D, software development, labor costs make the iPhone substantially more expensive than the iPad? That makes no sense to me. Surely they'd be roughly on par?
No, I'm saying that the cost breakdown is meaningless.

The price is what the market will pay, no more no less.
 

EssentialParado

macrumors 65816
Original poster
Feb 17, 2005
1,154
6
Of course, it's up to you how much you want to care about the cost of the iPhone. Right now most people see that $750 absorbed by their phone contract.

But if prices of the iPhone were more appropriate (let's say $300 for 3GS, $400 for 4, and $500 for 4S), it could push provider contracts to be shorter (1 or 2 years), because actually buying without a contract would be much more feasible. It would also increase the customers who could purchase an iPhone, especially those in countries outside of the US, where it's more normal to buy your phone off-contract.
 

cynics

macrumors G4
Jan 8, 2012
11,334
1,708
They obviously charge that much cause they can. It would be stupid not to do that. I wish it was less expensive but I can understand why it's not.
 

darklyt

macrumors regular
Jun 5, 2007
164
43
Aren't the parts used in the iPhone and iPod Touch not the same? I thought that things such as the display were higher quality (not higher resolution) in the iPhone.
 

EssentialParado

macrumors 65816
Original poster
Feb 17, 2005
1,154
6
I agree.
If we paid the cost breakdown down to what each component costs to manufacture then how would any company stay in business and make a profit?
I agree. And I didn't cite the cost breakdowns in my original post to compare the breakdown price of the iPhone against its retail price. I was comparing the relative difference in breakdown prices between the iPhone 4S vs new iPad — $188, and $365 respectively — compared to their actual retail prices — $750, and $630 respectively.
 

Shrink

macrumors G3
Feb 26, 2011
8,914
1,596
New England, USA
It seems to me, in my admitted ignorance, that Apple can charge whatever they want.

If they charge too much, they won't sell as many phones.

If they charge too little, they might sell a lot more (or perhaps not, as they would lose some of their cachè), but wouldn't make as much money.

So, they charge absolutely as much as they possibly can, and still sell a s**load of phones.

It seems that strategy is working out fairly well. :eek:

And, at the end of the day, isn't that what a for-profit company is supposed to do??

(Whether that is right or wrong is a discussion for another thread.)
 

Smug Boy

macrumors member
Apr 9, 2011
94
0
Anytime you subsidize something, the cost increases. If there weren't any discounts on the hardware for signing 2 year service agreements the price of the phone would not be $750.00
 

nitemare

macrumors regular
Jun 10, 2009
169
0
compared to their actual retail prices — $750, and $630 respectively.
actually if u compare the actual retail prices there is only a $20USD difference between the iPad 4g/lte and the iPhone 4s. a 64gb iP4S is $849 and a 64gb "new" iPad is $829. 32gb iP4S is $749 and "new" iPad is $729. the reason for the price difference is one is a PHONE and can make PHONE CALLS. yes you can VOIP calls on the iPad but if u lose wifi or 3g/lte service it serves you no good any more for those.

oh and those prices came straight off of apple.com so check your actual retail prices next time

you have to compare and 16gb to a 16, 32 to 32 and 64 to 64 doesn't work to price compare a 16gb iPad to a 64gb iPhone
 

taedouni

macrumors 65816
Jun 7, 2011
1,106
25
California
The iPhone is a phone while the iPad isn't one. Plus it's harder to design a phone such as iPhone because of apple's strict standards. To include a quad gpu and LTE on an iPad is easy. For the iPad apple doubled the battery capacity.
 

labman

macrumors 604
Jun 9, 2009
7,776
1
Mich near Detroit
So lets be honest you have people standing in lines sometimes weeks for your products. they have trouble keeping up with the demand sometimes for months. Would you then lower your prices just because your a really nice guy. ;) On the flip side Apple continues to have the best resale of there products as well. :D
 

Apple OC

macrumors 68040
Oct 14, 2010
3,580
2,254
Hogtown
you are paying more for the iPhone than the iPod or iPad because of one basic feature ... the phone part
 

cynics

macrumors G4
Jan 8, 2012
11,334
1,708
So the phone parts cost more the a screen 4 times the size ,a battery that size isn't comparable, LTE chipset, quad core gpu, more ram better CPU (not sure about those last two)?!

They charge more cause they can. It's how businesses do business. It's no secret. Just like how if a product is overstock and not selling they will practically give them away. Opposite goes for the iPhone.