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Why the iPhone X may not be "overpriced" at $999

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MrX8503

macrumors 68020
Original poster
Sep 19, 2010
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To get a sense of how much Apple is taking us to the cleaners, we have to look at the BOM costs.

BOM Cost:
iPhone 6S - $211.50
iPhone 7 - $220.80
Galaxy S8 - $307.50
iPhone X - $412.75

Profit Margin:
iPhone 6S - 67.46%
iPhone 7 - 66%
Galaxy S8 - 59%
iPhone X - 58.7%

So as you can see, the iPhone X is priced accordingly against Samsung's pricing model. You could say the iPhone 6/7 were overpriced. I wasn't able to get the Note 8's BOM cost. If anyone has it, please post it.

I'm not saying the iPhone X isn't expensive, because it is. This gives us a picture of why it's so expensive.
 
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pat500000 said:
At end of the day, people won't care about BOM cost or profit margin. It's not bad analyzing, but it doesn't matter at the end of the day. People will choose based on needs, purpose, and values.
Click to expand...

I agree, but this thread isn't about that, which is subjective.
 
ip8/+ - should really be called the 7s/+

Taking out the mid-tier model was greedy on Apple's part. Bad move.

The iPhone X - bad choices or oversights (depending on which camp you are in) coupled with insufficient time to get all the engineering difficulties solved led ultimately to a keynote reveal of a flawed product.

At this point, who really cares if pricing on the ipX is justified or not?
 
The question is not about the markup, it's about affordability and design considerations.

Apple spent a lot of money on OLED and cameras. Are those features worth it for the end user?

Another company may decide to spend their materials budget on 6 GB RAM instead. Does it translate to something worthwhile for end users?
 
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What I don’t understand is how Apple having an 8 and an X is any different than a BMW 1 series vs a 7 series. The 7 obviously has more features and obviously costs more. Do people complain and cry they can’t afford a 7 series? No if they want a BMW at entry level price they get a 1 series. Same with Apple now. If you want a more affordable iPhone get an 8.
 
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Sifko36 said:
What I don’t understand is how Apple having an 8 and an X is any different than a BMW 1 series vs a 7 series. The 7 obviously has more features and obviously costs more. Do people complain and cry they can’t afford a 7 series? No if they want a BMW at entry level price they get a 1 series. Same with Apple now. If you want a more affordable iPhone get an 8.
Click to expand...

I didnt realize the 1 series and 7 series shared the same engine/transmission internals.

It's more like deciding to get base 1 series vs a 1 series with a moonroof.
 
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MrX8503 said:
To get a sense of how much Apple is taking us to the cleaners, we have to look at the BOM costs.

BOM Cost:
iPhone 6S - $211.50
iPhone 7 - $220.80
Galaxy S8 - $307.50
iPhone X - $412.75

Profit Margin:
iPhone 6S - 67.46%
iPhone 7 - 66%
Galaxy S8 - 59%
iPhone X - 58.7%

So as you can see, the iPhone X is priced accordingly against Samsung's pricing model. You could say the iPhone 6/7 were overpriced. I wasn't able to get the Note 8's BOM cost. If anyone has it, please post it.

I'm not saying the iPhone X isn't expensive, because it is. This gives us a picture of why it's so expensive.
Click to expand...

Those profit margins are absurd across the board.
 
I love my iPhone 5S, which I bought refurbished for about $300 two years ago. The only thing I wish to upgrade about it is a better camera. But at the rate these modern phones are going up to ridiculous prices, I'm going to wait instead and then buy a refurbished iPhone X in 3 years or so... Right now the new prices are like a freaking awesome laptop. For a damn phone. Insane!

PS: Even Samsung Note 8 suffers from this modern price-bloat. Everyone is copying Apple's prices. Ugh.
 
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off_piste said:
Those profit margins are absurd across the board.
Click to expand...

This is just the BOM. You also have to take into account R&D, marketing, returns/replacements, operations, etc. That would probably push the X to 50% or less, which is a lot less than most people would believe. I would say it's not unreasonable, certainly not "absurd" compared to a lot of consumer goods.
 
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MrX8503 said:
BOM Cost:
Galaxy S8 - $307.50
iPhone X - $412.75

Profit Margin:
Galaxy S8 - 59%
iPhone X - 58.7%

So as you can see, the iPhone X is priced accordingly against Samsung's pricing model..
Click to expand...

Just quoting your figures for both S8 and X, I calculate how much profit both Samsung and Apple get when they sell each phone at RRP:

Galaxy S8:
BOM cost (41%) = $307.50
Profit margin (59%) = $442.50

iPhone X:
BOM cost (41.3%) = $412.75
Profit margin (58.7%) = $586.64

So Apple earns $144.14 ($586.64 - $442.50) more profit than Samsung for each phone at RRP. And not to forget Samsung phones tend to be discounted much earlier than iPhones.

So in conclusion, is iPhone X overpriced? Of course. But why does Apple care when so many people will be fighting over each other to order one (or two, or more) next month :rolleyes:
 
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The value of a product is not a function of its BOM cost. See Juciero for example -- $1000 BOM, $0 value.

iPhone X is EASILY worth $999. It scans your face and unlocks when you (and only you, 1/1,000,000 accuracy) pick it up. It's like a phone from the future... but it's coming November 3rd.
 
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It's not how much apple is making, it's the value equation for the consumer.
MF878 said:
This is just the BOM. You also have to take into account R&D, marketing, returns/replacements, operations, etc. That would probably push the X to 50% or less, which is a lot less than most people would believe. I would say it's not unreasonable, certainly not "absurd" compared to a lot of consumer goods.
Click to expand...
It's also Apples' supply chain management and huge manufacturing orders that keep BOM prices down. But as I said above, I do not believe people analyze the company's annual report to decide it they are "being ripped off" by "excess" profits.

But I would like to know how anybody knows what the real BOM costs for these phones; especially the iphone x. These are just gross estimates that may not even reflect reality.
 
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edfoo said:
Just quoting your figures for both S8 and X, I calculate how much profit both Samsung and Apple get when they sell each phone at RRP:

Galaxy S8:
BOM cost (41%) = $307.50
Profit margin (59%) = $442.50

iPhone X:
BOM cost (41.3%) = $412.75
Profit margin (58.7%) = $586.64

So Apple earns $144.14 ($586.64 - $442.50) more profit than Samsung for each phone at RRP. And not to forget Samsung phones tend to be discounted much earlier than iPhones.

So in conclusion, is iPhone X overpriced? Of course. But why does Apple care when so many people will be fighting over each other to order one (or two, or more) next month :rolleyes:
Click to expand...

But the iPhone X costs MORE to build. Overall the profit margin is about the same.

Yes Samsung phones are discounted more, but they're kinda forced to because of how many Android phones there are.

If you want iOS, you have to buy an iPhone from Apple.

So in conclusion, no the iPhone X isn't overpriced using Samsung's pricing model.
 
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MrX8503 said:
But the iPhone X costs MORE to build. Overall the profit margin is about the same.

Yes Samsung phones are discounted more, but they're kinda forced to because of how many Android phones there are.

If you want iOS, you have to buy an iPhone from Apple.

So in conclusion, no the iPhone X isn't overpriced using Samsung's pricing model.
Click to expand...
So what iPhone X cost more to build?

iPhone X costs $412 to build, sells for $999, Apple earns $586 profit.
Galaxy S8 costs $307 to build, sells for $750, Samsung earns $443 profit.

How can you say the profit margin is the same? If the profit margin is the same, iPhone X should be $412 (cost) + $443 (profit margin same as S8) = $855 selling price, not $999.

And please don't bring that iOS argument in here. We all already know if you want iOS, you only have iPhone as the choice. This is not the argement here.

So yes, iPhone X is still overpriced.
 
boast said:
Stainless steel is more expensive than aluminum, no? The SS Apple Watches are priced higher, and the X is stainless steel.
Click to expand...

Part of the cost besides the materials, is the craftsmanship behind it. I know the stainless steel Apple Watch I believe has more of a manufacturing process to achieve that high shine with the 316 L stainless. So I think that's partly factored into it.
 
999$ after tax over 1000$
same price ipad pro

alot people confuse why apple dont release iphone X only and why model 8 also release ... Just because apple want to identify how many people will order iphone X with 999$ ... if all jump in then next yrs all iphone start 999$ even higher

iphone raise just like apartment raise every yrs 15$-25$-35$-45$ bucks :)
 
What's the price of the plus model in comparison? I don't think you should put the x against the base model even though they are the same width
 
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If you intend or wanted to buy it but can’t afford it or don’t feel comfortable spending that much money then it’s overpriced.
 
MrX8503 said:
To get a sense of how much Apple is taking us to the cleaners, we have to look at the BOM costs.

BOM Cost:
iPhone 6S - $211.50
iPhone 7 - $220.80
Galaxy S8 - $307.50
iPhone X - $412.75

Profit Margin:
iPhone 6S - 67.46%
iPhone 7 - 66%
Galaxy S8 - 59%
iPhone X - 58.7%

So as you can see, the iPhone X is priced accordingly against Samsung's pricing model. You could say the iPhone 6/7 were overpriced. I wasn't able to get the Note 8's BOM cost. If anyone has it, please post it.

I'm not saying the iPhone X isn't expensive, because it is. This gives us a picture of why it's so expensive.
Click to expand...

It's $1357 outside of the US. You guys are getting it for about the price we got the iPhone 7 Plus so I'm not surprised you think it's reasonably priced. Apple is putting the price up considerably in Europe.
 
The iPhone is not overpriced.

If anything, it is underpriced.

It's increasingly clear that it will take months for people to get their hands on one. Demands is well and truly exceeding supply.

They should have doubled the price. It is an ultra premium product that should have been priced at ultra premium levels to curb demand.

There are plenty of other iPhone models for those who do not like paying high prices for phones.
 
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