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iPhone 8 Component Costs Estimated to Start at $247.51

Ries said:
If you sell 140mio omletts a year, should not be a problem to hit $2. You get a big rebate on ingredients at that scale and the automated omlett packaging machine is a onetime cost.
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Need to spend money to make money.

Is it even possible to buy only 2 eggs? Need to buy 12 minimum regardless. Restaurants use machines to make omelets? Even if they did still would require maintenance and electricity.

Not to mention at least the plate to serve it on. Someone to wash the plate. Someone to bring the plate to you. A table to place the plate on. A building to place the table in. All the misc. licenses and time it takes to get licenses to even be able to sell food.

You get the point.
 
wikiverse said:
These figures don't take into account R&D, Software, Assembly, Packaging, Shipping, Advertising, or Retail Store costs.
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R&D specially for the iPhone 8 models have been amortised a long time ago as the components placement and design remain exactly the same for the 4th year in a row and the A11 R&D will be amortised by two phones this season (iPhone 8 and X)The price increase is probably due to massive marketing campaigns (I feel there is more now than ever) and profit margins being stretched a bit more as Apple knows we will buy it anyway. All in all, I don’t blame them if people keep buying new iPhones every year.
 
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In economics this is something like the 'marginal cost' of an iPhone 8. You can downplay it all you want but it is a significant number.
Has anyone tried to even crudely quantify the R&D and retail overheads per customer? I imagine it wouldn't be more than $50.
 
wikiverse said:
These figures don't take into account R&D, Software, Assembly, Packaging, Shipping, Advertising, or Retail Store costs.
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But the article is about the cost of components . Points you raise are not relevant to the cost in this article.
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Kaibelf said:
Almost as interesting as the way people assume a $250 bill of materials somehow should produce free labor, development, marketing, retail read estate, and unpaid sales associates.
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Record profits by volume, but margins are about on par with history. No, they shouldn’t cut their margins as more people buy their products over time.
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Fascinating , you say margins are on par without having any idea of what they are :)

From my experience margins / prices go up each year , even with record sale volumes.

When margins and volume goes up, is that greed?
 
Gotta laugh at the outrage over this every time...You don't want to see your car's BOM..Never hear people about that, yet people gladly pay through the nose for those.
 
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MacRumors said:



The iPhone 8 and iPhone 8 Plus are more expensive for Apple to manufacture than the iPhone 7 and iPhone 7 Plus, according to component cost estimates research firm IHS Markit shared today with Bloomberg.

An entry-level iPhone 8 with 64GB of storage costs Apple an estimated $247.51 in raw materials, an increase of almost $10 compared to the $237.94 it cost Apple to make last year's 32GB iPhone 7.

The 64GB iPhone 8 Plus costs an estimated $288.08, up from $270.88 for the iPhone 7 Plus.

M
Image from iFixit's recent iPhone 8 teardown​
To compensate for the increased cost, Apple charges $699 for the 64GB iPhone 8 in the United States, up from the $649 starting price it charged for the 32GB iPhone 7 in 2016. The iPhone 8 Plus is priced starting at $799, up from $769 in 2016.According to Bloomberg, some of the most expensive components in the iPhone 8 and 8 Plus include the screens and the mechanical enclosures. Apple's new glass-bodied devices are built around a strong internal frame and include new displays with True Tone support.

Compared to iPhone 7 pricing, the wireless charging module increases costs by $2, the A11 Bionic chip costs $5 more, and the larger 256GB storage options increase prices by $6.

IHS's component costs are only estimates of what the iPhone 8 and the iPhone 8 Plus cost to manufacture, and sometimes those estimates are not spot on. For example, while IHS told Bloomberg cost $237.94 to manufacture an iPhone 7 in 2016, its initial estimates following the iPhone 7's release were at $219.80.

These estimates also only look at raw component costs and do not take into account other iPhone manufacturing expenses like research and development, software creation, advertising, and distribution, so this information, while interesting, is not an accurate measurement of Apple's profit margin for the iPhone 8 and the iPhone 8 Plus.

Back in 2015, Apple CEO Tim Cook said that cost breakdowns are generally "much different than the reality." "I've never seen one that is anywhere close to being accurate," he added.

Article Link: iPhone 8 Component Costs Estimated to Start at $247.51
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I always have second thoughts with these articles. Of course, making a component is relatively cheap. But these things do not grow on trees by itself as people need to design, test, prototype, retest, redesign, etc and these costs need to be covered as well in some way. These development-costs are immense when new technology is applied and need to be brought into a single consistent product.

However, the 8 seems to be a specification of the 7 with some new innovations so it is obvious that the prices for making this phone increased. It could even be that Apple anticipated on a less numbers sold due to the X so these costs need to be carried by lower numbers. That might drive the price up as well.
 
I think it's all relative really, you can only start to judge it vs the competition. A Samsung Galaxy S8 costs just over $300 in parts and retails for slightly less than a base iPhone 8. Apple develop their own software though.

I'd say you certainly get better value for money with some of the other brands based on that, and while Apple has the edge in processor power I'd say something like the S8 is arguably more advanced in other areas, especially screen. Apple isn't a value brand though and the same can be said for many brand comparisons. You pay your money you make your choice.
 
ani4ani said:
Not sure where the figure came from, but it is reputed that Foxconn earn about $6 a phone for assembly? This was "exposed" during their suicide scandal a few years ago.

I guess a lot of the assembly is automated, and perhaps only final finsihing and packing is labour intensive?
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And Foxconn probably pays their Chinese workers $6.00 a week. So the profit margin is pretty good.
 
Apple will charge the maximum they think people will pay.

On the other hand I will pay what I think is reasonable for something I need.

I have to say gone are the days I pay considerable amount of money for a fragile glass sandwiched device that will do pretty much the exact same stuff like the one I already have and am sick of repairing screens.
 
People always bring the same arguments "Oh you forgot R&D, shipping, advertising etc etc".

Yeah, but we're talking about unitary price so you have to convert those costs to unitary price too. What would be the cost of R&D of 1 single iPhone? 50? 100? and the cost of advertising of 1 single iPhone? another 50, 100? NO! way less than that. Way less.

It's public that Apple spent around 10.4 billion in R&D for their total projects (including secret ones) in 2016. How many iPhones did they sell in 2016? Around 211 million. Doing the math, gives a unitary value of 49 dollars per iphone spent on R&D. But Apple doesn't make money only in iPhone do they? iPhones are about 70% of their total revenue this value is gonna be way lower than that. Probably around 30 or so, maybe less. How much it's gonna cost shipping, ads per unit...?...

Lmao, guys gimme a break. These costs per unit are so low that the total price of making an iPhone (all included) is not gonna be higher than 400 or so. Hence the incredibly high margins and incredible high profits that Apple shows every year.

If my reasoning is flawed, please say otherwise and explain.
 
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AdonisSMU said:
They need to peg it to 35%. That is reasonable. The only reason they are 38% now is because they didn’t redesign the body for three years now. Don’t expect 38% margins this year.
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How are you determining that?
 
HardRain said:
If Apple wasn't making record profits your point might be valid. Don't worry buddy, Apple are doing fine..
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Record profits don’t make themselves.

Seriously, their costs are probably way too low. These analysts often just take cheap spot prices and assume Apple gets a better deal. In reality most tech OEMS probably pay slighly more that what you’d expect because they are buying prime quality parts at first-run prices on contract.. they’re not buying “leftovers” from Amazon or Newegg. Apple is pushing every component vendor to the limit of what they can produce at the highest quality.. they are certainly paying for it.
 
MH01 said:
But the article is about the cost of components . Points you raise are not relevant to the cost in this article.
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Fascinating , you say margins are on par without having any idea of what they are :)

From my experience margins / prices go up each year , even with record sale volumes.

When margins and volume goes up, is that greed?
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I just looked at Apple’s financials over the past 4 quarters. Gross margins for the past 4 quarters were 38%, 38.5%, 38.9%, 38.5%. Profit margin last quarter was 19.1%, down from 20.8% the previous quarter. Don’t need anyone’s experience when the numbers are easy to look up. :)
 
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rafark said:
Thing is, speaking strictly about the iPhone 8, it's a 4 year old design that doesn't really require that much in R and D unlike the iPhone X for which the costs of developing that cut screen (very hard, in all honesty) and the front camera sensors and software are quite expensive to develop.

Even then all of that is pointless once we get to one of the most important factors that end up being crucial in the pricing of a product: volume. The higher the volume, the less the development and production price.

If apple were selling only thousands or even several millions of phones per month then the price associated with developing the phone from manufacturing to r and d would need to be higher. But they don't sell dozens of millions, they sell hundreds of millions per year, this allows to lower the prices significantly, maxime considering they reuse many components across different products. For example, the processor, cameras and screen may be reused in two to three models of iPhone, the iPads and even the macs.

Need a billion to invest in the new processor? If they were to sell 150 millions of devices in one year from the models I mentioned in the last paragraph, they'd only need to add $10 to the manufacturing costs. That's what high volume does, and that applies to the manufacturing of the physical components as well.

Take the original iPhone, for example. That must have been VERY expensive to develop and produce as pretty much everything was brand new, despite they challenges they managed to price it at $500, and they weren't even selling a fraction of today's iPhones. They were selling comparatively low volume in a brand new market. Now they sell hundreds of millions in a well established market and the prices just happen to increase over time. That makes no sense.

The reality is, apple is now in a position were they can charge whatever they please, but just because they can doesn't mean they should.

Of course everyone at the end of the day is free to choose what they buy.
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So what is a price that’s “not excessive”? You quoted my question but did not answer it.
 
wikiverse said:
These figures don't take into account R&D, Software, Assembly, Packaging, Shipping, Advertising, or Retail Store costs.
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At some point all of that has been paid for and factored in. They aren't inventing brand new categories, phone designs, or even tech - well, I guess those animojis cost them BILLIONS. Still doesn't justify that much of an markup.
 
Wow, so many experts in Apple’s financial situation and internal cost structure. I’m surprised a lot of you guys aren’t asked for interviews for the various financial magazines and shows.

So much faux outrage here it’s amusing. There’s an old phrase I heard long ago: What do you call a 20 year old liberal? A 40 year old conservative. That is, it’s easy to be so idealistic when you’re young but once you’ve been in the real world for a while you realize it isn’t all daisies and altruism.
 
wikiverse said:
These figures don't take into account R&D, Software, Assembly, Packaging, Shipping, Advertising, or Retail Store costs.
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MacRumors should really stop with these articles, it’s click bait nonsense because of the points above.
 
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