iPhone XS Max Component Costs Estimated at $453 [Updated]

[alexnyc8]

Okay we will see you in a few years when prices are even higher.

Phones have reached a point where all future upgrades will be insignificant, at least for me (looking at the future roadmap for the next 3-5 years, in general - i do like OLED screen but it alone will never justify spending $1000 to replace a perfectly working phone).
What does iPhone Xs do, that a 6s does not? At least for me personally, nothing, which is why i will keep mine 7+ for a long time. Almost all of the Xs vs 6s new features are gimmicks and bragging rights (among those that care) - for those of us who use the device as a necessary tool the feature matrix has reached its peak, at least enough to justify not spending thousands of dollars ever year, or even every two years.

 

[Defthand]

I love the people who just assume "$1200 phone - (cost of parts) = pure profit". Shipping, logistics, marketing, paying their engineers 6 figure salaries each, manufacturing, etc etc etc.

You’re right, but it’s hard to ignore the $B’s in cash Apple sits on and the over-the-top campus they built. They’re milking us. And One has to wonder what they would charge if they only sold half as much product.

Meanwhile, I’ll bet the same people who excuse Apple’s pricing bitch when gasoline prices go up.

 

[pj-uk]

Different industry but the numbers are not too dissimilar. It’s frustrating to believe that people think that companies will just give products away based upon raw goods cost.

 

[Jwil736]

I wish they would splurge a couple bucks more for a top of the line mics.

 

[DNichter]

Of course Apple will never disclose it but what we can be pretty certain of is services have a higher margin than hardware yet even though services are becoming a bigger percentage of revenues Apple’s gross margins have stayed around 38%-40%.

Makes sense. All in all, they make a ton. Ultimately makes no difference to me as the value is there.

 

[cmaier]

Many products are overpriced and people pay thinking because of the high cost it is a better product , it is called marketing.

If they pay it then it isn’t overpriced. It’s called economics.

 

[Wando64]

We already KNOW this, or data that points towards this.

$443/$1099 =40%

Apple has a gross profit margin of about 38% so add on a bit of selling cost and your at 38%. They’re not going to diverge from that for a new iPhone, as the iPhone is the main product that drives that percentage.

R&D costs are not part of gross profit so they’re in the next section of the income statement.

It doesn’t work that way.
Profit margin% = (profit/revenue)*100

So in this case it would work out at approx 60%, however, in any case the figure quoted is simply the cost of materials.

 

[alexnyc8]

If they pay it then it isn’t overpriced. It’s called economics.

This would be true if credit didnt play a role in this. Unfortunately, many people get into debt buying things they can not afford, in turn raising prices for everyone else. Thats economics.

 

[citysnaps]

You might obviously enjoy spending all of your money on a single Apple product but some people feel they are ripped off by Apple rising prices each and every year on average. The iPhone XS Max can now cost as much as a decent specced laptop! You can even get a MacBook for the same money. What is next, next year, £2,000....£3,000...£10,000.

If you're feeling ripped off, maybe you should purchase a phone from a different manufacturer who offers better value? Vote with your wallet.

Easy.

 

[cmaier]

This would be true if credit didnt play a role in this. Unfortunately, many people get into debt buying things they can not afford, in turn raising prices for everyone else. Thats economics.

If you spend cash or credit it does not change the equation. You choose what to go into debt for. If you choose to go into debt buying an iphone, it must have been worth it to you. You don’t get to invent your own version of economics just to support your baseless and uninformed opinion that things that millions upon millions of people line up to spend their money on are “overpriced.”

 

[Cosmosent]

While it is important to Many to be in the AAPL Ecosystem, it's NOT important to Many to be @ the High-End (anymore) in the AAPL Ecosystem.

Every single person I know, who knows the new iPhones well & who isn't an AAPL Fanboy or Fangirl, is waiting for the XR.

COGS for the XR should come in right around $300.

It is AAPL's first-ever Single Camera iPhone with 3 GB of DRAM, & it has the exact same Back (Wide Angle) Camera "image sensor" as the XS & XS Max, which is an absolute Gem of an image sensor !

In fact, AAPL could potentially see a Flood of XS & XS Max returns, as the XR starts to become available ... of course, one would need to be within 30 days, I believe, of purchase.

Why do you think the spacing is what it is, "between" the XS / XS Max launch, & the XR launch ??? ... that's EXTREMELY intentional "spacing" ... they are worried about a potential Flood of Returns, & for very good Reason !

Going to go out on a limb here ... a few months from now, after the dust settles, those who opted for the XR will be perceived to be "smarter" than those who over-paid for the XS & XS Max !

 

[tridley68]

All i can say is it was the best $1,500.00 bucks i spent going from my i phone x to the XS max was a no brainer for me .

 

[Andronicus]

Here we go with the armchair business experts telling us what an appropriate markup is and isn't. Just remember that there's a LOT more cost involved in making a device like this than just the materials used. Engineering, marketing, packaging, retail stores, etc. And yes... even a markup because they wouldn't be making phones at all without a profit.

Just like the article stated.

 

[Abstract]

Most of the costs you and others point to can not EVER EVER be included in the actual cost of the iPhone. Simpler accounting. This is whyApple make about 40% profit margins per iPhone. This is why they have over $250 billion cash reserves.
[doublepost=1537914919][/doublepost]

They don't need to. The costs you and others keep bleeting about can not be included. Only some can be included. Most can not for reasons above most people's heads. Apple make vast profits. Simple as..truth..period. They are not one of the richest companies in the world for nothing.

In a discussion about how much Apple is charging for these iPhones when compared to their cost, why wouldn’t the other costs, which are obviously important in cost analysis, not be included?

I’m not denying that Apple makes 40% margin on their products. They do. Heck, it was almost 45% at one point. I’ve been around long enough to remember. That’s huge.

However, this component analysis gives the false impression that Apple is making 200-300% profit on some of their iPhones, which is clearly false. That’s way less than 40%, so tossing these $400 values around, and then discussing 40% profit margins leads to a really incomplete conversation. Manufacturing, R&D, and marketing are real costs.

It’s funny, because in many other industries, the cost of the materials/“components” of a product makes up roughly 10% of the actual cost, while labour, shipping, marketing, and ancillary costs make up the rest. People don’t boycott those products. People don’t “vote with their wallets”.

 

[Cryates]

Gotta love that markup. Wish I could get into a business like that.

You know, it’s not even as bad as I thought. I work for the worlds number one playground manufacturer, and our products hover around a 70% margin. If my math is right, Apple is around 65% margin on the Max?

Obviously this doesn’t take into account all of the others costs involved in creating and selling a product, same as with our company.

 

[PlainBelliedSneetch]

While it is important to Many to be in the AAPL Ecosystem, it's NOT important to Many to be @ the High-End (anymore) in the AAPL Ecosystem.

Every single person I know, who knows the new iPhones well & who isn't an AAPL Fanboy or Fangirl, is waiting for the XR.

COGS for the XR should come in right around $300.

It is AAPL's first-ever Single Camera iPhone with 3 GB of DRAM, & it has the exact same Back (Wide Angle) Camera "image sensor" as the XS & XS Max, which is an absolute Gem of an image sensor !

In fact, AAPL could potentially see a Flood of XS & XS Max returns, as the XR starts to become available ... of course, one would need to be within 30 days, I believe, of purchase.

Why do you think the spacing is what it is, "between" the XS / XS Max launch, & the XR launch ??? ... that's EXTREMELY intentional "spacing" ... they are worried about a potential Flood of Returns, & for very good Reason !

Going to go out on a limb here ... a few months from now, after the dust settles, those who opted for the XR will be perceived to be "smarter" than those who over-paid for the XS & XS Max !

I think it is funny that someone from La Jolla is accusing others of over paying.

 

[H.E. Pennypacker]

Uhm. No.

Clearly you haven’t sold product before.

 

[falainber]

Recently I noticed a few people talking on their iPhones while phones were connected to something (in a purse/pocket) with a cord. I assume the phones were connected to the power banks. Never seen this before. These must be old iPhone models. Might be a coincidence but perhaps those power cords serve as the umbilical cords keeping people in Apple ecosystem because they can't afford new iPhones anymore.

 

[TimUSCA]

So are you saying that poor old Apple makes hardly any profits at all? In which case I wonder where that more than $250 billion cash reserves they have came from? A Christmas cracker? lol

That’s… not what I said at all. And I have no idea how that’s what you got from it.

 

[DSTOFEL]

Gotta love that markup. Wish I could get into a business like that.

So, the sales price of the 256 Xs Max is $1250 less the component cost of $443 leaves a gross margin of $807 or roughly 65%. Note: Apples direct labor associated with assembling the component parts is missing from the calculation of gross margin....so would bring the margin down a bit more. Then they have to pay for the dome in Cupertino, R&D, Salaries, etc... (ie Overhead). Rough estimate of 30% or $375 of overhead leaves a net margin of $432 or roughly 35%. Seems in line to me...I mean they’ve got a product that arguably nobody else can match - so they’re gonna charge for it.

 

[yaxomoxay]

Clearly you haven’t sold product before.

Clearly you haven’t worked on a high tech product before with administrative and budgeting duties.

 

[ericinboston]

... luckily for me though, my 7+ works like a charm (previous one was a 3GS) and i intend to keep it until it falls apart

I had my 4S since its first day of release and got rid of it May 2017 under pressure and ridicule from everyone I know that owned a 5 or 6 or 7 style. I bought the $1000 256GB 7+ iPhone and love the camera but that's all I can rave about compared to the 4S. I bought it (rather than a 6 or 7) primarily for the camera for great kids pix. The 7+ costed far, far too much money compared to my 4S and if I hadn't been so paranoid about screwing up my AT&T account and Apple accounts, I would have returned it and re-enabled the 4S (which I still keep to this day for a fantastic iPod Touch sister). The 4S' battery still lasts several months (no, that is not an exaggeration) while it is powered off. I just turned it on for posting and it's still got 68% life after at least 5 weeks in my desk drawer.

My 7+ will be with me far, far longer due to the ridiculous price and mediocre value that I see for this smartphone. Other people may disagree and use their phone 23 hours a day with 29 apps, 7 hours of movie streaming, etc. but I just don't ever see plunking down more than $400 ever again...regardless if it's Apple or some other brand.

I do like the 7+...but it's just so bleeping expensive and I too will keep it until it dies.

 

[Sandman619]

As we learned in business school you have direct costs & indirect costs. Components are the bulk of direct costs. The OS which comes for free has a real & sizable cost which Apple has to recover. Also the next 4 or 5 full version upgrades are a cost to Apple. Sure Androids come with free version upgrades if the handset maker decides to include last year’s device in its upgrade path. Apple upgrades at least 3 prior handset versions for free. Then there are the online storage & sync services which is free for every user. The advantage for Google is that they monetize user data to support their business & mobile devices is a big opportunity for making $$$. While Apple has some features that can generate revenue they aren’t known for monetizing user data so you pay for what you receive.

 

[lJoSquaredl]

That is a big plus PC has. The real joke is an out dated Mac costing what it does. Lol

If you don't care about all the other **** that comes with Mac, but the price is easily comparable to other laptops and you get **** that Windows doesn't have...but if we're comparing an iMac to a shady box of PC parts in a big ass case then yes those aren't fair comparisons lol. I pay for more than just the parts, which if we're talking editing seems to run circles around PCs if you use FCPX. I saw a MacBook Pro using FCPX beat a desktop PC using Adobe as well, I'll pay more for that lol

 

[Wags]

Good thing they didn’t upgrade the charging block. That would have killed their profit.