Pretty much this. It's not a surprise.
I still looks like you're paying too much.I could build my own with old PC components for much more less:
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New iPod Shuffle Contains $22 Worth of Parts
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So I guess you're pretty pissed about Microsoft selling Office for $350, Starbucks for selling a $4 cup of coffee, BMW selling a $40K car, Paul Reed Smith selling a $4000 guitar, Nikon and Canon selling $5000 cameras, etc.
Oh wait, it's Apple. THE OUTRAGE!!!!
BTW, how can you be ripped off if you didn't buy one?
That price is, of course absurd. If you don't believe it, go and get the same batch of parts and let me hear it play music . The real costs are in development, design, and intellectual property. Not in hardware. I am amazed every time I go out for a walk with my nifty little iPod Shuffle (2nd gen) clipped to my jacket, at the quality of the music it can generate. What Apple charges for the Shuffle is quite fair IMHO.
Rich
. The real costs are in development, design, and intellectual property. Not in hardware. I am amazed every time I go out for a walk with my nifty little iPod Shuffle (2nd gen) clipped to my jacket, at the quality of the music it can generate. What Apple charges for the Shuffle is quite fair IMHO.Rich
100% Profit margin?
The ONLY way to have 100% profit margin is if the product cost you $0 to make, ship, etc.
If I sell you a product for $1 and my cost to is $0 - that is 100% profit margin - more than 100% profit margin would be is it cost me $0 and I sold it to you for $1 but you gave me $2 instead. - or maybe if I was getting some back end rebate from the supplier that I got the product from.
Perhaps what you meant was 100% Mark-up - with is quite different than 100% profit.
if my total cost is $50 for a given product and I sell it to you for $100 than is a 100% markup because the profit is equal to the cost - but it is only 50% profit since my profit of $50 is only half - or 50% of the total sale price of $100.
As someone else mentioned part of the cost of every product any company sells is the operational cost of having office locations and retail locations etc. In fact, part of every purchase you make is used to pay for legal costs of both prosecution and defense. And there is a big difference between gross profit and net profit - Apple may have higher profit margins than the industry average - but the gross profit of 50% on a single product sold likely translates to something more like 5 or 10% net profit.
The ONLY way to have 100% profit margin is if the product cost you $0 to make, ship, etc.
If I sell you a product for $1 and my cost to is $0 - that is 100% profit margin - more than 100% profit margin would be is it cost me $0 and I sold it to you for $1 but you gave me $2 instead. - or maybe if I was getting some back end rebate from the supplier that I got the product from.
Perhaps what you meant was 100% Mark-up - with is quite different than 100% profit.
if my total cost is $50 for a given product and I sell it to you for $100 than is a 100% markup because the profit is equal to the cost - but it is only 50% profit since my profit of $50 is only half - or 50% of the total sale price of $100.
As someone else mentioned part of the cost of every product any company sells is the operational cost of having office locations and retail locations etc. In fact, part of every purchase you make is used to pay for legal costs of both prosecution and defense. And there is a big difference between gross profit and net profit - Apple may have higher profit margins than the industry average - but the gross profit of 50% on a single product sold likely translates to something more like 5 or 10% net profit.
Cheap Ipod
Way to go Apple. Cool Ipod, made with cheap parts, but really cool to have, everybody's happy. I have no problem with Apple making way more money than usual on these little ipods. It's just that some apple products were built with value for the customer. I will stick with my nano, it's plenty small.
Speaking of value, I suppose it won't be long before Gates makes a commercial about giving some schmuck $80.00 to buy a music player and gets to keep the change. They go out and buy something similar at half the price, and then bows to the Microsoft God, professing their support for all that is PC, except for apple that is PC. Hmm, Maybe the shuffle should have had 8 gigs of memory...naw, no one can touch the ipod... NO ONE!
Way to go Apple. Cool Ipod, made with cheap parts, but really cool to have, everybody's happy. I have no problem with Apple making way more money than usual on these little ipods. It's just that some apple products were built with value for the customer. I will stick with my nano, it's plenty small.
Speaking of value, I suppose it won't be long before Gates makes a commercial about giving some schmuck $80.00 to buy a music player and gets to keep the change. They go out and buy something similar at half the price, and then bows to the Microsoft God, professing their support for all that is PC, except for apple that is PC. Hmm, Maybe the shuffle should have had 8 gigs of memory...naw, no one can touch the ipod... NO ONE!
lol, true.
People are obviously buying at the price Apple has set. I wonder if he owned a business, would he realise people are buying at X price, but set the price at X minus Y because he felt bad the customer was paying so much?
Of course not.
Either pay it and be happy, or don't and be quiet.
LOL! Just LOL!All products are marked up. I think the news on the Shuffle here is obviously designed to spark business debate on more than just Apple's music players.
After all, when you buy a Shuffle, you aren't buying just a music player ... you're buying a "holistic philosophy". You know, that "vertically integrated philosophy" where everything is supposed to "just work" for the Shuffle.
People that bash Apple for pricing seem to not understand simple supply and demand. Do you think it's a good value for the price? No? Then don't buy it.
But someone is buying, because someone thinks it's a good value. Hence why Apple is still in business.
In the event the majority of Apple product buyers cease to think they're a good value, guess what? The sales will go down, Apple will stop making money, and they'll either adjust pricing accordingly, or die.
Do I think Apple products are expensive? Yes. Do I think they're not a good value? No. So I continue to buy, until they piss me off.
What the hell are you talking about? The larger cost goes into the non-parts portion which won't get less expensive.
I think everyone should be required to take at least a basic business class at some point in their life so we can cut down on the amount of outrage based on ignorance in the world.
Lethal
Lethal
Did you miss the part of the article that mentionned that all the chosen parts were the highest quality available and the most advanced ?
Serious question here.
All products are marked up. I think the news on the Shuffle here is obviously designed to spark business debate on more than just Apple's music players.
After all, when you buy a Shuffle, you aren't buying just a music player ... you're buying a "holistic philosophy". You know, that "vertically integrated philosophy" where everything is supposed to "just work" for the Shuffle.
Or you know, you're not just buying 22$ worth of parts in a box. We're not talking Macintosh computers here. Did you miss the 50 other posts that all said the same thing ? Basically : "There's more to any products than just parts".
I think this one is simply logical. The some of parts does not make a product. Even your Dell probably doesn't have more than 150$-200$ of actual parts in it, doesn't mean that's what it costs to make, sell and support.
I realise you're just trying to spark yet another "Apple sells stuff for more than everyone else!" debate (like we don't already have 4 threads were you participate in such debates).
Go take an economics, accounting, and finally a marketing class. The cost of goods has very little to do with the 'value' or selling price of a product. As long as you can sell your product for a greater price than what you paid to build it that's what you do. If you can sell it for 1000% of your build price you do it. This isn't an Apple apology. It's called business.
Generally crazy high margins don't last because of competition (big margins bring competitors from all over). Apple has a nice position of being more desired that most of its competitors at the moment so they can keep these margins up.
I completely agree with you. That'll not stop some people from complaining about the price, regardless.
Why are people getting so defensive about a breakdown of parts cost?
Apple is allowed to charge whatever the market will bear. It's up to the customer to decide whether it's worth it.
Making outlandish comparisons to drug manufacturers, or attributing their suspected margins on bundled itunes software isn't really necessary
Anyway, I doubt
has invested that much R&D into this shuffle. It's a complete dud esthetically and functionally
Apple is allowed to charge whatever the market will bear. It's up to the customer to decide whether it's worth it.
Making outlandish comparisons to drug manufacturers, or attributing their suspected margins on bundled itunes software isn't really necessary
Anyway, I doubt
has invested that much R&D into this shuffle. It's a complete dud esthetically and functionally
Dude,
You're wrong. Profit margin is defined as gross profit divided by cost of goods sold. Gross profit is net sales minus cost of goods sold. There's other stuff in there that gets factored, like operating costs, etc.
Also, profit margins typically refer to companies and not a single product.
In your example
Net Sales = $1
Cost of Goods Sold = $0
Profit Margin = (1-0) / 0 = infinity
In the iPod Shuffle example, not including development costs etc.
Net Sales = $80
Costs of Goods Sold = $22
Profit Margin = (80 - 22) / 22 = 263%
It's very easy to get Profit Margins exceeding 100% ... well maybe not easy, but it is possible.
ft
Something else people should keep in mind is that not all products have equal markups and some products are even sold for a loss (or near loss). The classic example is the razor & blades business model where the razor is basically given away but the blades have a high markup. Printers and printer ink is the same thing. Apple's software is pretty much a loss leader to sell its hardware and I don't think a lot of people realize that and realize that's why Apple can sell software so cheaply. For example, Final Cut Studio contains around $30k-$35k worth of applications and Apple sells the whole thing for $1300. There's no such thing as free lunch so Apple has to try and make up those losses somewhere.
Lethal
Not only that, just watch Antiques Roadshow sometime and see what some people would pay tens of thousands of dollars for, completely aside from any materials cost involved - just stuff people have lying around. The value of an object is what people are willing to pay for it, which is generally unrelated to its production cost.
[sarcasm]Ah yes, but you see they're wasting their money!! They could have bought a brand new one that does the same thing!! What a poor value!![/sarcasm]
*yawn* wow, you mean apple charges more than what the constituent parts are worth for their products in an attempt to make up for the R&D, manufacturing and marketing costs. gosh, what a ground breaking story. holy sh#t!!
Wow....perhaps, now that everybody is armed with this information, you all can just go build your own and **** about how expensive Apple's products are.
After all, if assembling one of these is so cheap & easy, why spend time complaining. Just go roll your own.
After all, if assembling one of these is so cheap & easy, why spend time complaining. Just go roll your own.
Actually, you're wrong. Profit margin (or more correctly, gross profit margin, in this case) is defined as:
Profit Margin = (Revenue - Cost of Goods Sold) / Revenue
Here's a link that explains it:
http://en.wikipedia.org/wiki/Gross_profit_margin
What you are describing is mark up:
http://en.wikipedia.org/wiki/Markup_(business)
The poster you were correcting actually got it right.
I'm not quite sure this one holds up anymore. Have you seen the prices of Gilette starter packs ? Sure there's a definite markup on the price of the blades, but I'm pretty sure there's not even 0.50$ of parts in that package. Of course Tiger Woods can't be that affordable as far as advertising goes.
I think pretty much the only example left of this type of market is video game consoles and cellular phones.