Apple's iPhone 6 Plus priced nearly 294% above its cost: report
24 Sep 2014
The iPhone 6 that sells for $649 and $849 without a middleman, costs Apple between $200 and $247 to build, giving the product a sales margin of 69 per cent for the entry-level model, according to research firm IHS.
Based on an evaluation of the parts used in each model and an estimate of the labour involved ($4 to $4.50 for each device), IHS has found that the more expensive models are priced proportionately higher.
The more expensive models sport 128 GB of storage space, netting Apple a slightly higher margin and that is why Apple wants you to buy the larger models, according to IHS.
The iPhone 6 Plus costs an additional $15.50 to make, according to researchers at IHS, but the sticker price is $100 higher than the iPhone 6. Apple pockets an extra $84.50 on each iPhone 6 Plus, according to IHS.
The main difference in cost between the two phones comes from the supersize screen, which adds $7.50 to Apple's production cost. The camera and battery subsystems also cost slightly more. Both iPhone 6 models are more expensive to make than the 5S, even though certain components like the camera and memory have actually become less expensive, says IHS.
The teardown, executed by research firm and shared with Re/code, puts the cost of manufacturing the iPhone 6 Plus at anywhere between $215.5 and $262.5 against the sticker price of $749 and $949 per piece – a margin of between 293.96 per cent and 261.52 per cent.
IHS found the costs range from $200 to $247 for iPhone 6 models that sell for $649 and $849 without a contract.
According to Re/code reports, Apple has improved its profit margin for its phones. While the iPhone 5 and the iPhone 5S both provided the same margin of around 69 per cent, the first iPhone in 2007 gave Apple a 55 per cent margin.
The iPhone 6's screen costs Apple $45 and the iPhone 6 Plus' screen costs $52.50, the analysis says.
The analysis doesn't take into account other costs involved, including advertising, marketing and distribution.
IHS had, In April, reported that a Samsung Galaxy S5 with 32GB costs the company $251.52 while it sells for $599, giving Samsung a margin of around 138.15 per cent.
While a margin of 138.15 per cent is very healthy, a pair of $300 Beats headphones from Apple cost anywhere from $14 and $40 to produce, generating a margin of 2,842 per cent and 640 per cent, respectively.
