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Is Apple gouging customers with iPhone X price?

mwhals

mwhals

macrumors 6502
Original poster
Sep 16, 2012
429
196
I saw on Fortune tech that the iPhone 7 components were $401 with a selling price of $649.

IPhone X is estimated to have $581 in components with a selling price of $999.

Assume labor costs of assembly are the same for simplicity. The iPhone X markup is $418 vs $248 for the iPhone 7, both excluding assembly costs.

I do know R&D is more for the iPhone X, which may account for the markup.
 
It's definitely a premium device and I feel like Apple (and others) are now testing the waters for premium smartphones. Personally, I don't like the trend but there are a lot of Apple fans who will 'just buy it' regardless of price.
 
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Price is determined by what will generate the most profit and has very little to do with the cost of materials. You are not buying a handful of parts. You are buying the result of years of development and a decision as to how to get maximum profit. Enjoy.
 
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Of coarse they are. Wait a couple of years and the X type iPhones will drop in price. Apple will suck all they can from the fanboys who will pay whatever Apple charges.

Once sales start to lag because of the price there will be a lot of pressure on Apple to return the flagship unit under the $1000 mark.
 
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What’s bothersome is that I don’t see them cutting back on the price in the foreseeable future.
I wouldn’t mind spending it ONCE if the next gen would be cheaper again, but it’s not gonna happen.
 
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mwhals said:
I saw on Fortune tech that the iPhone 7 components were $401 with a selling price of $649.

IPhone X is estimated to have $581 in components with a selling price of $999.

Assume labor costs of assembly are the same for simplicity. The iPhone X markup is $418 vs $248 for the iPhone 7, both excluding assembly costs.

I do know R&D is more for the iPhone X, which may account for the markup.
Click to expand...
I don't know why we have to be overly simplistic, we don't have to boil everything down to superficials. I have an idea - why don't you start your own company making phones and get a real idea of what the real cost of making a phone apart from just the cost of components, let me give you hint on the first step, it's called NRE, do look it up.
 
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My first computer was a used Powerbook 150 bought at CompUSA....it was $1200....ran at 33megahertz, 150 mb HD....was that expensive....you bet it was.
 
people will spend the money for what they want...sometimes it costs for top shelf things...people go out and purchase expensive cars even though there's depreciation, people spend money on fancy bags, clothes or shoes or jewelry....at least we have options....we can choose to invest, purchase a late model car, an older phone, payless shoes and bags....your money, your choice. don't try to make others feel inferior by your choice
 
Greg M said:
Of coarse they are. Wait a couple of years and the X type iPhones will drop in price. Apple will suck all they can from the fanboys who will pay whatever Apple charges.

Once sales start to lag because of the price there will be a lot of pressure on Apple to return the flagship unit under the $1000 mark.
Click to expand...

They’ve never lowered prices on products except refurbs in like, ever. In a couple years that $1k tag may look better when another phone costs $1500;)
 
I reserve "gouging" for charging exorbitant prices for necessities that cannot be easily acquired, such as, say, $20 for a 10-lb. bag of ice after a hurricane has knocked out power for most people.

I had been anticipating a large-display iPhone in a smaller form factor than the Plus-size for a good while. I naively thought that it would replace the 4.7 and 5.5 models and be a similar price, so, yes, I was disappointed when the price for the X was announced.

But the iPhone X is no need--it is a want. People can live quite happily without it. If Apple can persuade people to spend $1000 - $1200 or whatever for one, then fine. Folks don't have to buy one. I won't. It's not worth that much money to me. But I don't call it gouging.
 
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It’s hardly a necessity, so no it’s not gouging. Is it overpriced? Perhaps. Well know sometime next year when we have a few quarters of iPhone sales numbers that have either blown the roof off YOY sales or sank like the Titanic.
 
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I wouldn't say they're gauging the phones are getting better hardware and are becoming capable of literally doing it all. The fact is, in reference to the X, their profit margin isn't as high as it usually is, so I'd consider it fair actually, while it is a bit high, you're getting the seamless Apple support and OS as well
 
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mwhals said:
I saw on Fortune tech that the iPhone 7 components were $401 with a selling price of $649.
Click to expand...
I think the Fortune article you read was wrong.

Here's another Fortune article:

$248 = iPhone 7 components
$401 = gross margin (i.e. $649 MSRP - $248 component cost = $401)

COMPARED TO

$581 = iPhone X components
$418 = gross margin (i.e. $999 MSRP - $581 component cost = $418)

So Apple appears to be making an extra $17 in gross profit on the iPhone X. Not sure that's gouging...
 
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I heard that Apple were struggling to produce the X en masse due to being unable to order OLED panels at the required quantity which is why --due to supply and demand-- they're happy to sell the handset at a premium in the knowledge that the hardcore supporters among us will pay extra for the limited supply of the flagship model.
 
Yes.

The iPhone X is a lot like the 12" MacBook.

When the 12" MacBook came out (and even now) it brought several new innovations such as a new keyboard and Force Click that eventually flowed to the rest of the line. It was far too expensive for what it offered because it was the new thing and "innovative."

The X offers many "innovations" for the iPhone, but nothing worth a price such as that. It's just new. The line will balance out in time.
 
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Yes. Apple isn't selling anything new that other manufacturers haven't been selling for a year or longer but yet they are charging $150-$250 more for the X. No way that device costs that much to make.
 
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aristobrat said:
I think the Fortune article you read was wrong.

Here's another Fortune article:

$248 = iPhone 7 components
$401 = gross margin (i.e. $649 MSRP - $248 component cost = $401)

COMPARED TO

$581 = iPhone X components
$418 = gross margin (i.e. $999 MSRP - $581 component cost = $418)

So Apple appears to be making an extra $17 in gross profit on the iPhone X. Not sure that's gouging...
Click to expand...
I saw a different article. One of them has the iPhone 7 numbers backward apparently.
 
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