Yes, I can see how Chinese labor slave-wages can constitute the other 76%, compared to American housing construction / Union labor jobs. Good comparison.
That wasn't his point
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Apple Watch Sport Component Costs Estimated at $83.70, Which Won't Sit Well With Tim Cook
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That wasn't his point
Non-issue. If you want it, the price is OK with you, you buy it. I've never cared about what the mark-up is. Of course, those costs....if accurate...do not take into account the R&D costs.
If this bothers you, don't buy anything anymore. It's not like only Apple tries to make a profit.
If this bothers you, don't buy anything anymore. It's not like only Apple tries to make a profit.
In that case the watch might have 1$ in raw material, so apple sells it at 350 times the raw material cost. How many cars are sold at $350,000? I'm not saying the price Apple charges is not fair, but your comparison does not make sense.
...plus, Apple don't expect you to "voluntarily" add on an extra 20% "service charge" because apparently the 1000% markup apparently doesn't cover paying their staff enough to sleep indoors.
Unless you are clueless on how to cook spaghetti.
Sounds like a good idea for a Watch App.
I can understand Tim Cook's frustrations at these, even if they are 100% accurate, they don't reflect the massive RD&E costs, SG&A costs, product liability, logistics, and every other part of running a business that sells a product, especially globally.
The actual cost of the hard goods is never even in the top 3-5 cost items in this industry.
Great report, and always great data points and knowledge to have. Love understanding this, but when people take this data to make comments and conclusions about 1) profiteering 2) "the cost should be lower" or other such conclusions, it only shows ignorance of what it takes to market and deliver a product like this.
The actual cost of the hard goods is never even in the top 3-5 cost items in this industry.
Great report, and always great data points and knowledge to have. Love understanding this, but when people take this data to make comments and conclusions about 1) profiteering 2) "the cost should be lower" or other such conclusions, it only shows ignorance of what it takes to market and deliver a product like this.
That wasn't what I was talking about. The guy claimed that apple watch is the cheapest first generation apple product. It's not, the Apple TV was cheaper.
No one has ever asked you or anyone else to ignore those things. Not sure why people get so upset when the BOM's get released and take it as a personal insult. On the other end I don't know why people get upset when they think Apple products are overpriced, there are alternative products for everything apple makes. If you don't like the price don't buy it.
There is a tangible cost for any product and it very complex based on part availability & volume pricing and manufacturing labor & overhead. The parts cost can only be estimated... in actuality this cost is negotiated with many suppliers. Manufacturing cost can change too with all kinds of agreements that are based on things like payment terms, amortization of tooling and equipment, etc. On top of that there are import duties, shipping cost (plane & boat) government fees and other hidden from view costs. This is just to get the product to the destination warehouse so it can be sold. Finally, as has been mentioned here, there are the R&D, NRE & sales & marketing costs which add to the mix coupled with company profit that is made.
So while someone can breakdown and estimate a bill of materials and guesstimate the manufacturing cost it's really only a small part of the picture. Apple is a profitable company, they have a high profit margin and not the only company that does. They make quality products and you (we) pay for that.
I used to do electronic manufacturing business with some consumer electronic companies in Asia and FOB (Freight On Board) to Retail pricing could easily be 300 to 400 points. So something that cost $11.00 to build by the time it got on the boat was selling at $44.00 retail. If the product sells great if not there is a lot of margin to discount and still make a profit. No one should be disturbed by the Bill Of Materials cost of a product... you'd probably be really pissed if you knew the actual BOM cost on your car! This is simple how it's done... shocking maybe if you never knew but this is how it is - nothing to get worked up over.
So while someone can breakdown and estimate a bill of materials and guesstimate the manufacturing cost it's really only a small part of the picture. Apple is a profitable company, they have a high profit margin and not the only company that does. They make quality products and you (we) pay for that.
I used to do electronic manufacturing business with some consumer electronic companies in Asia and FOB (Freight On Board) to Retail pricing could easily be 300 to 400 points. So something that cost $11.00 to build by the time it got on the boat was selling at $44.00 retail. If the product sells great if not there is a lot of margin to discount and still make a profit. No one should be disturbed by the Bill Of Materials cost of a product... you'd probably be really pissed if you knew the actual BOM cost on your car! This is simple how it's done... shocking maybe if you never knew but this is how it is - nothing to get worked up over.
I know, just showing that the BOM for the 2 products (64$ vs 83$) where not that far apart and yet have considerably different MSRPs.
What about the cost of defective parts or watches that don't pass QA? Wouldn't that be added into the "cost of the watch"?
While a Papa Johns Pizza... broken down into components might cost $2, due to the cost of transportation, labor to put together the pizza, burned crusts in the oven, etc... the actual cost rises to $6.
Remove the Apple logo and in its place on identical hardware put a Xiaomi badge. See how much it sells for then.
The Apple watch is overpriced, this is kind of why an Audi A4 sold for more than its Skoda equivalent. Deal with it.
Dont be so blind.
Every other product Apple sells has overhead expenses as well. Yet, the raw costs of those products is a much higher percentage of the retail price.
The idea that a product cost is based solely on what its parts / pieces cost added together are, is ridiculous. So that $1.99 cup of coffee from (fill in the blank with whatever coffee purveyor you want), only costs them about $0.225 per cup (based upon retail cost of coffee, plus water, a filter and a cup). Does that mean they're earning an obscene amount of profit?
The same exercise can be done with just about any consumer product or service.
The same exercise can be done with just about any consumer product or service.
wrong
I can almost 100% assure you these are not the correct costs..R&D, component pricing, etc. notwithstanding. And I'm not just saying that they could be off by pennies.
That said. we already know that the Apple Watch is more time consuming to assemble and put together than the iphone. So in an overall price roll-up, including labor (Again, R&D, investment, CapEx notwithstanding) you could probably double this price to get to a more standard 100% mark-up model.
I can almost 100% assure you these are not the correct costs..R&D, component pricing, etc. notwithstanding. And I'm not just saying that they could be off by pennies.
That said. we already know that the Apple Watch is more time consuming to assemble and put together than the iphone. So in an overall price roll-up, including labor (Again, R&D, investment, CapEx notwithstanding) you could probably double this price to get to a more standard 100% mark-up model.
It was just the breakdown of the sports watch. The gold one costs more due to the gold used, the sapphire, the band and the fact it will be produced in a lot less numbers.
You're not buying a bag of parts.
Lots of people don't get this. Ive seen comments from people who clearly cannot fathom why you'd buy an iPhone over a more powerful Android phone, regardless of benchmark scores, other features like Touch ID and the ecosystem preference.
Quite apart from the fact Apple can buy huge quantities of this where as we can't, if we were to assemble them ourselves. Also there's R&D costs etc.
Finally: like I said, you're paying for the product. An Apple Watch Sport is greater than the sum of its parts. If you think it is worth £x you'll pay for it.
Lots of people don't get this. Ive seen comments from people who clearly cannot fathom why you'd buy an iPhone over a more powerful Android phone, regardless of benchmark scores, other features like Touch ID and the ecosystem preference.
Quite apart from the fact Apple can buy huge quantities of this where as we can't, if we were to assemble them ourselves. Also there's R&D costs etc.
Finally: like I said, you're paying for the product. An Apple Watch Sport is greater than the sum of its parts. If you think it is worth £x you'll pay for it.
Well, after it went through the Blendtec, it was probably only a few cents worth of 'components.' I'm not sure what that has to do with anything. We're paying for the design, engineering, manufacturing techniques, etc. The cost of the raw ingredients aren't that important.
For decades, I used Macs even though I could built up a PC for less money (and, having worked in IT, with multiple OSs and having built machines and servers from components, I had all the knowledge, and then some, to do so!). I've seen much better prices on Android phones too. It isn't all about the price.
For decades, I used Macs even though I could built up a PC for less money (and, having worked in IT, with multiple OSs and having built machines and servers from components, I had all the knowledge, and then some, to do so!). I've seen much better prices on Android phones too. It isn't all about the price.
Incredibly ugly and overpriced. Great combo. But Apple knew sheep would line up for the chance to overpay, so good on 'em for that.
Yeah. The only thing they accomplish is get everyone into a confused rage thinking that these things cost more than they should. While it's true that these things cost a lot, a lot of money went into developing them and that money has to be recouped by raising the price.