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iPad Air Component Costs Estimated to Begin at $274, Roughly 13% Cheaper Than iPad 3
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Pretty embarrassing that Apple still charges a $130 premium for the 4G versions of the iPad, considering the part only costs about $30. I understand they love their margins and charge an "Apple tax", but charging an extra $130 just for the ability to then pay for cellular service is ridiculous. They should charge an extra $50 at most; I'd even accept $100 though. $130 is just crazy.
In fact, Apple should just throw us a bone and make every iPad capable of a cellular connection. There shouldn't even be Wifi and Wifi+4G models, there should just be one model that has everything, and priced at the current Wifi model levels. This would make up for the fact that their margins on the flash memory are even more disgusting. Of course, I don't actually expect them to ever do this.
In fact, Apple should just throw us a bone and make every iPad capable of a cellular connection. There shouldn't even be Wifi and Wifi+4G models, there should just be one model that has everything, and priced at the current Wifi model levels. This would make up for the fact that their margins on the flash memory are even more disgusting. Of course, I don't actually expect them to ever do this.
Not to forget the software plus 1 year Apple care, free upgrade and all around great support....
Would have been nice to pass on a portion of the savings if there are any.
Just because the parts are cheaper doesn't mean the overall manufactering cost are lower.
Just because the parts are cheaper doesn't mean the overall manufactering cost are lower.
Coca-Cola is just sugar, flavoring and water.
It costs about 5 cents in materials to make a 2-liter. They sell it for between $1 and $2.
That's a 1,000-2,000% markup. Where are the articles on this?
Thank you! One of my favorite projects was with one of the top 5 beverage companies, and I had the chance to take a closer look at the art and science that goes behind products that people take forgranted!
Apple's margins are not 45%. Anyone who has spent any time working retail would know this.
Anyone who spends 2 seconds clicking on yahoo finance can see their margins are 22%
Do you know how much a pair of Nike's cost to make? Or any brand name t-shirt and jeans?
Google also is making enough profits that they don't need to be shoving ads down our throats every second. But they do, they are a business, not a charity.
Or Microsoft charging $100+ for a CD worth less than $1.
I'm speaking specifically about the iPad air which retails for $499 but has a BOM cost of $274.
$499 for that product given what it costs to build... Apple is making peanuts on each unit. If you think you are getting ripped off buying an iPad air for $499, don't ask about the BOM cost of the garden variety audio electronics you buy at Best Buy. Or the manufacturer cost for furniture.
The $130 extra for cellular connection, just like the $100 extra for 16, 32, or 64 GB of SSD is all part of the overall balance. Just like any company with a retail line Apple has a whole department responsible for pricing and margins, they do volume forecast and predict how much each SKU is likely to sell, and no they don't have a fixed margin on every device, margins vary between SKUs.
Let me put if for you this way: If Apple decides to charge only $50 extra for Cell version, and maybe $50 extra for extra memory, then the 16 GB wifi model price will shoot up.
What did Apple put you through?
If you feel like Apple is mistreating you, your best bet is to tell them buy taking your money elsewhere. You shouldn't reward a company's bad behavior by giving them your money.
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Your comment shows a complete lack of business understanding. The cost of something is not just the cost of the components. It needs to reflect the expenses of the whole company to create this item - everything from R&D, infrastructure, salaries, and even rent for your business. While the item (iPad) theoretically could be cheaper, if you want to make a profit it needs to be way higher than the cost of the components. If you're model is to be a loss leader that's a different thing, then you hope to make it up some other way. Apple, like most every other company, creates a product to make a profit from sales.
As other people here have stated, you can look at most any company and see much higher mark-ups. Look at the markup on say pasta at restaurants. Then you'll see how your complaint shows a lack of understanding.
Sounds like you answered your own question.
Your beef should't be with Apple. Your beef should be with the other tablet vendors that are not offering you an acceptable choice.
Really, it's the same as the first iPad. It is a good thing that you are here to set the record straight
It is such a shame that Apple did not hire you as their CEO because you certainly would have priced the iPad *right* and made sure that the stock holders are happy and made sure that Apple had enough profit after R&D, packaging, etc.----------
It is such an unfair world we line it. Companies actually charging what the market is willing to pay.
I heard Apple has to pay FCC fees and other licensing fees for anything with a cellular radio.
So maybe that's why they charge an extra $130 for the 4G iPads.
It's not just the $30 part... it's all the other stuff they need to do.
This. People act like Apple is holding a gun to their head to buy their products. Don't like the prices don't buy it. And before anyone says it, having a large investment in the Apple eco-system is not the same thing as being forced to buy Apple products.
If you have your heart set on an iPad and are unwilling to pay for the latest incarnation due to the lack of innovation, I have a generation 1 iPad I am happy to sell for $250 - half the price of the latest version. (Ready to put your money where you mouth is?)
They are in the form of putting the money back into R&D and new projects.
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So you are saying that you want Apple to price the base model which would be a 16GB WiFi+LTE iPad Air starting at $629 because that is what you are asking them to do. Apple charges what the market is willing to pay, simple as that. We all vote with our dollars.
You set the bar pretty low. If you are making wishes, you should go big. Like maybe Apple should be paying us to own and use their products.
I have an iPad 4, so why would I want that? So in other words, tell me how the experience of getting the iPad Air compares to the iPad 4? Oh, that's right nothing. The experience is the same on both devices. If you call making a computing device faster "innovation", then you delusional. Computers getting faster is standard procedure we already expect. If anything, the iPad Air more efficient.
this doesnt really include the following:
assembly costs
shipping costs
research and development costs
licensing fees (to use certain patents etc)
marketing
etc..
There is still a huge margin but not as much as state here.
Still blows my mind they didnt put in 2 gb of ram when it would only be a few $ more but think about it $5 x 10million devices. Plus when they upgrade it next year they can use it as a selling point.
assembly costs
shipping costs
research and development costs
licensing fees (to use certain patents etc)
marketing
etc..
There is still a huge margin but not as much as state here.
Still blows my mind they didnt put in 2 gb of ram when it would only be a few $ more but think about it $5 x 10million devices. Plus when they upgrade it next year they can use it as a selling point.
I think you're looking at it wrong, they aren't charging a $249 markup for 128gb, they are discounting the price of the lower storage options, taking a hit on the unit profit, and planning for the numbers to shake out positively in the end.
So really, the buyers of the 128gb version should be upset because they are actually subsidizing the base model "cheapskates".