Here's How Much It Costs Apple to Make a Vision Pro Headset

[phenste]

Homepod was mispriced. This product is intentionally priced high to manage the demand. Apple can't manufacture that many, and wants to sell only to early adopters.

I am aware, I was in fact using it as an example of another mispriced product given that they eventually dropped it to $299 similar to the iPhone 2G price drop (though that came far too late, with no rebate, and imo is still quite a premium for the speaker, as good as it sounds)

edit: probably worth mentioning that I’m not implying AVP’s price should go down in this generation. knowing the cost of components gives us roughly 1% insight into why they priced it the way they did. people around here just have a habit of misremembering Apple’s first-gen products as being reasonably priced when they virtually always are not for some reason or another (major exception for iPad, $499 was the reason it became the blockbuster product it did)

 

[spaxxedout]

This BOM is outdated. It’s been on Weibo forever. Notice how the memory portion lists “12g + 512”.

Apple has a duty to maximize shareholder return. The product is priced appropriately.

One thing I would like to add is that Meta’s products are sold at a loss in order to gain marketshare / digital revenue. As such, the meta experience will be centered around social experiences / games / etc. their BOM on quest 3 is like $470.

I’d rather have a product where the incentive is to make margin at time of purchase rather than relying on harvesting revenue from social / ads / etc.

 

[leman]

So a whopping $1,958 in profit for the $3500 base model? Tim must be literally swimming in profits like Scrooge McDuck. 💰

You have a steakhouse. You buy a steak from a farm for $5, you sell it to the customer for $60. Did you just make $55 in pure profit? Think about it.

 

[vipergts2207]

Homepod was mispriced. This product is intentionally priced high to manage the demand. Apple can't manufacture that many, and wants to sell only to early adopters.

You're right it was mispriced, but your reasoning is off. Makes no sense considering that they discontinued the first one and replaced it with a lesser version.

 

[Blackstick]

You have a steakhouse. You buy a steak from a farm for $5, you sell it to the customer for $60. Did you just make $55 in pure profit? Think about it.

People who think running a business is free (I guess in their garage or basement) have never considered mundane expenses like payroll taxes in California or the price of running a 3 million square foot facility.

 

[onenorth]

I have been using mine around an hour every day absolutely love it. Worth the price IMO. Doesn't really matter if it cost too much or if it becomes extinct. From my perspective what is important is the enjoyment and satisfaction level.

Yes. I think we are thinking about it in the wrong way.

Apple will price it at whatever the market can bear.

Hermes sells sofas for $150,000. Trying to figure out that one based on costs and R&D makes no sense.

 

[mlenger]

Geez - a lot of armchair manufacturing engineers out there. This is an estimated BOM - no labor included. No manufacturing equipment and its amortization over production run. Legal fees, IP, leave alone the software development. 10 years plus R&D. Marketing, sales and the cost of running a business in CA. So if you know even the tiniest bit about manufacturing and business you will realize it’s actually not that expensive for what you get.

 

[TravelsInBlue]

Gotta subsidize all the people who bought it out of FOMO, realized they couldn’t afford it and then returned it because “it’s defective/not very useful” despite all this information being readily apparent months before launch.

 

[G5isAlive]

The suggestion that R&D would justify a retail price three times larger than the components cost is ludicrous. R&D is a very small part of Apple costs and in the last few years it hasn’t grown at all (in fact I think it has gone down). Apple invests very little in research, and it shows in the lacklustre amount of innovation we saw in the last few years.

Very little? Would love to know how much you think is a lot. in 2023 Apple invested $30 billion in research. $30 BILLION. To put that into context the budget for NASA is 25.3 billion.

and compositely speaking, apple is seen as investing quite a bit.

Will Apple's record-breaking R&D spending pay off with the M3 chip series?

Apple's recent introduction of the M3 chip series has intensified the competition in the global PC market, posing a formidable challenge to Intel's PC camp. However, this move aimed at expediting the complete transition of its Mac lineup to Apple Silicon has come at a substantial cost.

www.digitimes.com

anyway, there is no satisfying some people, but it's false to imply Apple doesn't spend a lot on R&D.

 

[jole]

You thought pro was short for professional?

Pro is a bit short of professional

 

[yabeweb]

With insane, R&D, huge production line setup costs, and low volume, I’d be surprised if Apple makes a lot of money of the first Vision Pro. To them, it’s an investment in the future, not a quick cash grab.

Of course one could lower the price and make more sales to make up for it….

 

[FattiesGoneWild]

They won’t even come close to recouping even half of R&D costs.

 

[testcard]

Presumably during all those years of development the designers and engineers gave their time for free?

 

[leman]

Of course one could lower the price and make more sales to make up for it….

Not if you can only produce a limited quantity to begin with.

 

[Darren.h]

So It should be a $2000 Headset. $500 profit is more than good enough.
GREEDY.

 

[Chuckeee]

Since the article address the BOM, this makes me very interested about what the assembly process is like. What is the assembly time? How much assembly is hands-on labor? How much of the assembly is automated? Etc.

Unlike most of Apple’s products, the bulk of the AVP is not just PCB assembly. This could be a big deal since it might imply, significantly more hands-on labor associated with the assembly.

 

[picpicmac]

since they do not take into account research and development costs, packaging, shipping, sales, marketing, and any capital expenditures that can add up-front costs to large parts orders.

Let out of that list: life-cycle support.

After the sale there are still costs involved, with software and hardware support. Until the product is put on the list of items no longer supported, Apple will spend money on post-sales actions.

 

[picpicmac]

So It should be a $2000 Headset. $500 profit is more than good enough.
GREEDY.

Tell me you are not in the business of making consumer electronics.

 

[Dust-by-Monday]

Research and Development boosts the cost for sure. I wonder if they've been working on this for 10+ years. Does anyone know when they started developing the vision pro?

 

[yabeweb]

Not if you can only produce a limited quantity to begin with.

Limiting production is a nice way to hike the price…

 

[DoogH]

Honestly, I would rather see them focus on improving FOV, motion blur, and the cameras before making a more affordable model.

I returned it because it wasn’t good enough, not because it was too expensive. I realize for other people, they would rather have the price come down.

 

[duffman9000]

So It should be a $2000 Headset. $500 profit is more than good enough.
GREEDY.

That sounds exactly what people lacking financial means say. That shiny Porsche I want should be 60k not 120k! Damn greedy capitalists!

 

[dampfnudel]

Apple could’ve charged $2,499 and still make a healthy profit. Maybe the second generation will at least get a $2,999 price tag if sales slide drastically. Apple Pro Vision, first generation or “Sucker’s Edition” as you can call it.

 

[Mr_Ed]

So It should be a $2000 Headset. $500 profit is more than good enough.
GREEDY.

Look, I’m one of those who still does not see a compelling use for this device for the masses, but a BOM amounts to fraction of the cost of developing a device like this. It would not surprise me to find that even at $3500, they are losing money on each one sold this generation.

 

[Mescagnus]

Hermes sells sofas for $150,000. Trying to figure out that one based on costs and R&D makes no sense.

They are hand-made of highest quality materials by artisans. If you cannot fathom the price of Hermes, you are not their demographic. If you cannot stomach the price of Apple Vision Pro, you are not their demographic either. On its technical merits, Apple Vision Pro is very reasonably priced.