New 16GB Wi-Fi Apple iPad cost $316.05 to make says iSuppli
0. phoneArena 17 Mar 2012, 22:45 posted on
Once again iSuppli has come up with an estimate of how much the latest Apple device has cost the Cupertino based tech giant to make; the new iPad has a higher cost basis than the Apple iPad 2, partly because of the Retina display...
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1. markhsu (Posts: 11; Member since: 17 Mar 2012)
My math is a little rusty but how do you get 50% margins with a cost of $316 and a selling price of $499?
3. cr4zyn1nj4 (Posts: 4; Member since: 07 Mar 2012)
Yeah, I think the word PA was looking for was markup, not margin. The markup is 58%, while the margin is 37%.
8. markhsu (Posts: 11; Member since: 17 Mar 2012)
Markup is the wrong word as well. To get 58% markup based on their cost the selling price is $752.38.
4. raunak (Posts: 458; Member since: 12 Oct 2011)
316 X 50/100 + 316 = 474. So you get 50% at 474. At 499$, you get even more.
7. Mario1017 (Posts: 336; Member since: 04 Sep 2011)
ya, 58%, but thats the markup, not the profit margin, profit margin is only 37%
9. markhsu (Posts: 11; Member since: 17 Mar 2012)
I don't even know what you are trying to calculate in that formula. You are just adding half the cost of the product to the cost of the product which is fine but that does not equal profit margin. To get 50% margin you just multiply by 2 that is the easiest margin to markup. For all other percentages you take your cost, in this case $316.05 divide that by (1 - mu%) where mu% is the desired markup in decimal format. So what Mario noted below is that at $499 the margin is only 37% to check his math $316.05 / .63 = $501.67. His 37% was 36.6% rounded up so it checks out. I guess this is the result of schools not teaching business math and showing people how to make money. I hope you enjoyed your free business lesson today.
2. darktranquillity (Posts: 282; Member since: 28 Feb 2012)
I think this price is for making an individul unit. When it comes to mass production, the prices of raw materials and such comes down significantly leaving apple with the said amount of profit. Correct me if i'm wrong.
10. stealthd (Posts: 747; Member since: 12 Jun 2011)
Why would anyone price out a literal single unit when they're ONLY made in mass production?
5. hung2900 (Posts: 649; Member since: 02 Mar 2012)
"Samsung, Apple's arch enemy in the courtroom, is Apple's BFF in the clean room"
6. gogorock01 (Posts: 1; Member since: 18 Mar 2012)
That's great, just pre-order the ipad, and order a case here :http://www.eachsupplier.com/wh