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Why does the iPhone 5 16GB cost over $600 no contract when

D

DBZmusicboy01

macrumors 65816
Original poster
Sep 30, 2011
1,272
2,220
When the iPod touch 32Gb 6th generation cost $300
It's strange because difference is that the iphone 5 has a little better camera LTE and better internals but why double ? When it only has 16GB of storage.... The smaller NAND itself should had even out the price to match the new iPod touch. Think about it
Is the price of the no contract iphone fair ? I think not.
 
DBZmusicboy01 said:
When the iPod touch 32Gb 6th generation cost $300
It's strange because difference is that the iphone 5 has a little better camera LTE and better internals but why double ? When it only has 16GB of storage.... The smaller NAND itself should had even out the price to match the new iPod touch. Think about it
Is the price of the no contract iphone fair ? I think not.
Click to expand...

The NAND price difference is not much at all - so that would make very little difference in price in either direction. It's all the other internals - including the radio chips, the camera, etc. The profit margin is also just higher because they can get it.

The iphone IS Apples money maker.
 
Because the majority of iPods are bought by people who don't want a phone contract (or are children) and thus have already self-identified as someone trying to save money.

Conversely, the majority of iPhone money comes form the carrier initially who then charges it back to you over 2 years, so it's much easier to ignore.

So you have one product being sold up front to price-senstive customers and then you have another that has the price spread out over 2 years to customers who you know are willing to spend more for a phone contract, so they have to have a bit of money.

This is just basic supply and demand stuff. "Because they can" is the shorthand.
 
From http://www.isuppli.com/Teardowns/News/pages/iPhone5-Carries-$199-BOM-Virtual-Teardown-Reveals.aspx, the iPhone 5 16 GB only costs $207 to make but $649 at retail, giving it a greater than 200% markup. It is also common knowledge that Apple gets a large kickback (a percentage of your monthly fees) from the phone carrier whenever you sign up on a contract and buy an iPhone. That is why iPhone plans tend to be more expensive and less willingness for your phone carrier to give you discounts or upgrades if you have an iPhone. This could mean that apple has a net profit margin of 300-400% on each contract iPhone. In short, Apple charges an obscene amount to the phone carriers and to you.
 
SomeDudeAsking said:
From http://www.isuppli.com/Teardowns/News/pages/iPhone5-Carries-$199-BOM-Virtual-Teardown-Reveals.aspx, the iPhone 5 16 GB only costs $207 to make but $649 at retail, giving it a greater than 200% markup. It is also common knowledge that Apple gets a large kickback (a percentage of your monthly fees) from the phone carrier whenever you sign up on a contract and buy an iPhone. That is why iPhone plans tend to be more expensive and less willingness for your phone carrier to give you discounts or upgrades if you have an iPhone. This could mean that apple has a net profit margin of 300-400% on each contract iPhone. In short, Apple charges an obscene amount to the phone carriers and to you.
Click to expand...

This post is wrong on so many levels...
 
SomeDudeAsking said:
From http://www.isuppli.com/Teardowns/News/pages/iPhone5-Carries-$199-BOM-Virtual-Teardown-Reveals.aspx, the iPhone 5 16 GB only costs $207 to make but $649 at retail, giving it a greater than 200% markup. It is also common knowledge that Apple gets a large kickback (a percentage of your monthly fees) from the phone carrier whenever you sign up on a contract and buy an iPhone. That is why iPhone plans tend to be more expensive and less willingness for your phone carrier to give you discounts or upgrades if you have an iPhone. This could mean that apple has a net profit margin of 300-400% on each contract iPhone. In short, Apple charges an obscene amount to the phone carriers and to you.
Click to expand...

iPhone plans are just as much as any other android smartphone. Lol, the operating margin phone manufacturers make on phones is great, Samsung phones are also 599-699-799, so it's not only apple doing it. Carriers subsidize your handset but believe me they're profiting a ton as well. It takes about 15-20 dollars for a month for AT&T to run a smart phone line. Yet we pay close to 100. AT&T also let's you do early upgrades on iPhones only. So I really don't see your logic there, they're also more willing to let you upgrade if its an iPhone when you're close to your upgrade date. Trust me both of these companies are making money, they both win, consumers lose.
 
SomeDudeAsking said:
From http://www.isuppli.com/Teardowns/News/pages/iPhone5-Carries-$199-BOM-Virtual-Teardown-Reveals.aspx, the iPhone 5 16 GB only costs $207 to make but $649 at retail, giving it a greater than 200% markup. It is also common knowledge that Apple gets a large kickback (a percentage of your monthly fees) from the phone carrier whenever you sign up on a contract and buy an iPhone. That is why iPhone plans tend to be more expensive and less willingness for your phone carrier to give you discounts or upgrades if you have an iPhone. This could mean that apple has a net profit margin of 300-400% on each contract iPhone. In short, Apple charges an obscene amount to the phone carriers and to you.
Click to expand...

lmao NOPE WRONG



TS, the Solid state of the iPod is divide in two slots, so 16 +16 =32, but on an iPhone the other slot is reserved for the phone so the memory has to fit in one slot, so 32 on an iPhone is way more expensive than on an iPod. Also, better everything cost more than old hardware plus R&D to make sure everything works, especifically antenna designs, spectrums, voice & noise, etc etc.
The iPod is made basically from older parts, usually cores that were not deem usable on an iPhone end up being used as a core chip on an iPod and the rest of the hardware by the time it comes to the iPod Touch becomes really cheap to make. It's like comparing a year old computer that is being sold next to a brand new computer, both can run the same OS, but the new one w/ more power and specs always cost more.
 
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You always pay a premium for Apple products. Apple may have a smaller share in overall smartphone sales, but 75% of smartphone market profit is theirs. There doesn't have to be an actual reason for Apple to have such prices. It's just because people are willing I pay for it.

Edit: I admit that these numbers are from early 2012 though. 9% share in mobile phone sales and yet 75% profit share.
 
Do they sell at that price?
If yes then the price is fair.
Econ 101.

And what the others said.
 
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SomeDudeAsking said:
It is also common knowledge that Apple gets a large kickback (a percentage of your monthly fees) from the phone carrier whenever you sign up on a contract and buy an iPhone. That is why iPhone plans tend to be more expensive and less willingness for your phone carrier to give you discounts or upgrades if you have an iPhone.
Click to expand...

Are you talking about the amount subsidized, which is sometimes larger than low end smartphones? AT&T paid Apple a portion of subscription fees at first. That expired a long time ago. If they were still asking that, it would have halted their growth. AT&T wouldn't have subsidized them on top of these payments, and there is no way smaller carriers could have afforded this. I mention smaller carriers partly because the US is not the only iphone market. Beyond that, I don't think it matters. Other viable phone options exist. They do the same things, and contrary to what a few (emphasis on few, even if they can be loud) imbeciles will tell you, they don't melt down every time you try to send a text.
 
SomeDudeAsking said:
From http://www.isuppli.com/Teardowns/News/pages/iPhone5-Carries-$199-BOM-Virtual-Teardown-Reveals.aspx, the iPhone 5 16 GB only costs $207 to make but $649 at retail, giving it a greater than 200% markup. It is also common knowledge that Apple gets a large kickback (a percentage of your monthly fees) from the phone carrier whenever you sign up on a contract and buy an iPhone. That is why iPhone plans tend to be more expensive and less willingness for your phone carrier to give you discounts or upgrades if you have an iPhone. This could mean that apple has a net profit margin of 300-400% on each contract iPhone. In short, Apple charges an obscene amount to the phone carriers and to you.
Click to expand...

Once again jumping in to post something to bash apple yet not having a clue about what you're actually posting. Leave the business stuff to the big boys.
 
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DBZmusicboy01 said:
Why does the iPhone 5 16GB cost over $600 no contract when
Click to expand...
DBZmusicboy01 said:
Is the price of the no contract iphone fair ? I think not.
Click to expand...
The why doesn't matter. You've made up your mind and no one is going to be able to justify it for you. If you think it's not fair (which is irrelevant -- it's supply and demand) then don't buy it. No product fits everyone's needs/wants/budget. People in the US have a skewed perception on what's "fair" pricing due to subsidies. Try buying one in another country.

SomeDudeAsking said:
From http://www.isuppli.com/Teardowns/News/pages/iPhone5-Carries-$199-BOM-Virtual-Teardown-Reveals.aspx, the iPhone 5 16 GB only costs $207 to make but $649 at retail, giving it a greater than 200% markup.
Click to expand...
"Costs to make" isn't just component cost. This has been pointed out countless times in these component cost discussions. Apple certainly makes plenty on its products but they do have other business costs as well. These things don't design, develop, QA, manufacture and distribute themselves.
 
SomeDudeAsking said:
From http://www.isuppli.com/Teardowns/News/pages/iPhone5-Carries-$199-BOM-Virtual-Teardown-Reveals.aspx, the iPhone 5 16 GB only costs $207 to make but $649 at retail, giving it a greater than 200% markup. It is also common knowledge that Apple gets a large kickback (a percentage of your monthly fees) from the phone carrier whenever you sign up on a contract and buy an iPhone. That is why iPhone plans tend to be more expensive and less willingness for your phone carrier to give you discounts or upgrades if you have an iPhone. This could mean that apple has a net profit margin of 300-400% on each contract iPhone. In short, Apple charges an obscene amount to the phone carriers and to you.
Click to expand...
That's just the Bill Of Materials (BOM). There are many other costs that are less tangible (development of the phone, research & development, transportation, packaging, every person working at Apple's salary, etc.).
 
Apple is a luxury brand. They price accordingly. Apple only plays in the luxury market. They freely state this themselves. Any item they produce, is always the most expensive in the category. Their ipad Mini is cheaper, but it's easily the most expensive smallish tablet. They won't do anything different and likely never will.

Whether this premium is worth it is up to the buyer. I suspect that as time goes on, it won't be to most buyers b/c the cheaper alternatives are getting MUCH better relative to iOS-based devices. But hey, it's not Apple's fault that Amazon and Google are willingly selling devices at cost or at a loss. It's more like the disparity between an Amazon or Google device (no profit or neg profit) vs Apple (super high profit margin) that drives everyone batty. A prospective customer would be right to go "what? why is the iphone 5 so much more expensive than everything else out there?"

A Nexus 4 should not cost $300; it should cost much more. An iPhone 5 should not cost $700, it should cost much less. One would not think that the iPhone could sustain these large price premiums forever, but so far this logical assumption has proven highly illogical. Everyone keeps buying iPhones.
 
Hey, Google might be shaking things up big time with their affordable pricing, open platforms, free services, but... what was I saying again?

Oh yeah, the iPhone, at least the 16GB version, is priced in line with other high-end phones (Galaxy S3, Note 2, One X etc.) None of them should cost as much as they do, but the market is willing to pay it, and has been for a long time. I bought a Nokia N93 for ~$800 in late 2006.

For some idiotic reason though, the unlocked iPhone 5 price in Canada went up $50 to $699, with tax, thats close enough to $800!

unagimiyagi said:
Apple is a luxury brand. They price accordingly. Apple only plays in the luxury market. They freely state this themselves. Any item they produce, is always the most expensive in the category. Their ipad Mini is cheaper, but it's easily the most expensive smallish tablet. They won't do anything different and likely never will.

Whether this premium is worth it is up to the buyer. I suspect that as time goes on, it won't be to most buyers b/c the cheaper alternatives are getting MUCH better relative to iOS-based devices. But hey, it's not Apple's fault that Amazon and Google are willingly selling devices at cost or at a loss. It's more like the disparity between an Amazon or Google device (no profit or neg profit) vs Apple (super high profit margin) that drives everyone batty. A prospective customer would be right to go "what? why is the iphone 5 so much more expensive than everything else out there?"

A Nexus 4 should not cost $300; it should cost much more. An iPhone 5 should not cost $700, it should cost much less. One would not think that the iPhone could sustain these large price premiums forever, but so far this logical assumption has proven highly illogical. Everyone keeps buying iPhones.
Click to expand...
 
That's just how things are priced in the phone market. Though, we're starting to see cheaper no contract devices, like the Google Nexus 7, for $300 or so.
 
Because Apple is not code word for RED CROSS...

They sell products for the absolute maximum they can (and still generate the sales they want). If things aren't selling at the rate they want (see the original 8/4GB iPhones) they cut the price and give the early adopters (in some cases) a present for the privelege.

Good for them!

If you don't want something, don't buy it! Don't let it bug you. This is a free market, and if enough people thought it was too expensive it would either 1) Flop or 2) have it's price reduced.

The iPhone now is in no danger of that. Apple is a BUSINESS. They don't have to cater to everyone at the lowest price.

It's awesome. I wish I had a product I could overcharge for and still have people line up to buy. Good for them!
 
SomeDudeAsking said:
From http://www.isuppli.com/Teardowns/News/pages/iPhone5-Carries-$199-BOM-Virtual-Teardown-Reveals.aspx, the iPhone 5 16 GB only costs $207 to make but $649 at retail, giving it a greater than 200% markup. It is also common knowledge that Apple gets a large kickback (a percentage of your monthly fees) from the phone carrier whenever you sign up on a contract and buy an iPhone. That is why iPhone plans tend to be more expensive and less willingness for your phone carrier to give you discounts or upgrades if you have an iPhone. This could mean that apple has a net profit margin of 300-400% on each contract iPhone. In short, Apple charges an obscene amount to the phone carriers and to you.
Click to expand...

Apple gets zero kickback from carriers in US, or part of your monthly bill. Just a stupid, stupid baseless claim.
 
Because people will pay way more for a phone with all those iPod features than they will for just an iPod. You can't just look at parts in price determination. Do that with drinks at any restaurant and you'll want to kill yourself for buying one. No, that Coke does not cost $2.49 unless you get about 80 refills.
 
DBZmusicboy01 said:
When the iPod touch 32Gb 6th generation cost $300
It's strange because difference is that the iphone 5 has a little better camera LTE and better internals but why double ? When it only has 16GB of storage.... The smaller NAND itself should had even out the price to match the new iPod touch. Think about it
Is the price of the no contract iphone fair ? I think not.
Click to expand...

The pricing isn't supposed to scale logically. The charge what they think people will pay. Also the cost of all the new technology development is very expensive. Apple makes only 27% profit after expenses on the iPhone 5, yet the phone costs $200 to make and sells for $700 or so. That new processor, display tech Siri etc aren't cheap at all. You're paying right around $148 per new iphone for development costs year over year. Apple essentially pays for an entire year of technological development with that year's flagship iphone. Last years iphone is much cheaper for that reason.
 
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