Latest iPhone cost estimate comes in at $30 bucks

Latest iPhone cost estimate comes in at $30 bucks
With the help of additional information brought to light by an ABC Nightline report that covered Apple’s manufacturing partner, Foxconn, Asymco analyst Horace Dediu has taken a second look at the iPhone manufacturing process and determined that the device costs a little more than previously assumed to make.

Previous estimates, based entirely on hardware teardowns, thought that the iPhone cost about $8 a unit to produce. Breaking down the 24 hours that it has been previously reported that the iPhone takes to build, Dediu accounted for the potential human labor hours involved and multiplied those estimates with the labor rates reported by ABC, which were $1.78 an hour.

Using that information, he has estimated than an iPhone costs roughly $30 to produce. He does note, however, that there is an additional $60 associated with each device to account for transportation and warranty expenses.

Even with the most conservative estimates, we know that an iPhone generates about $650 on average, so however you slice it, the iPhone is a high margin device for Apple.

source: Asymco via SlashGear

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44 Comments

1. corporateJP

Posts: 2458; Member since: Nov 28, 2009

Still mad profit, son.

2. gfresh404

Posts: 12; Member since: Jan 21, 2012

Apple overcharges for everything - this isn't anything new. Still kinda cool to know the exact numbers tho

9. k1ng617

Posts: 270; Member since: Oct 13, 2009

I love Android (Last three phones were/are Androids) But, it's only overcharging if people aren't willing to pay it.

13. 14545

Posts: 1835; Member since: Nov 22, 2011

Actually, economically speaking, I don't think it is possible to "overcharge" for something. Speaking strictly on supply and demand, the amount of demand will change as the price rises. iDrones just don't understand the concept of money.

16. Tux4g63

Posts: 121; Member since: Oct 21, 2011

when the human ego and hubris is involved, people will pay anything to feel like they "have it."

18. clevername

Posts: 1436; Member since: Jul 11, 2008

You know if people have the money to spend on extravegant things they want let them. Doesn't mean they have no concept of money. On the contrary if they can afford these things they probably have a great concept of money and how to make it. I paid the same for my galaxy s 2 as I did for my iPhone 4 a couple years ago. It I'm paying the same regardless of OS then it has nothing to do with the concept of money.

20. tedkord

Posts: 17414; Member since: Jun 17, 2009

Nobody is saying people shouldn't be able to spend however much they want on any item they want. I think it was just a comment on them paying for the brand name. $100 worth of product, $100 worth of R&D and $450 worth of having the Apple logo on it. My wife is the same way - she's willing to pay $400 for a purse just because it's Coach. It drives me nuts, because it's got about $20 worth of materials and labor in it, and it doesn't do anything an actual $20 purse can't. (And, it's ugly as sin. At least the iPhone 4s is pretty) My sister in law is even worse - she won't buy anything that isn't the most recognized brand, even if it's known inferior quality. (She has an iPhone 4 she bitches about constantly for signal loss issues, but won't consider any other phone, even though she doesn nothing on it that most feature phones won't do.)

24. quakan

Posts: 1418; Member since: Mar 02, 2011

Well we do live in a society that has a way of trying to make people feel inferior if you don't have the most cash (or more than the people around you) or best things. It's what keeps some people from being to get ahead in life because some people, in many cases, will put their wants before their needs because they need to constantly reassure themselves that they are good enough. Spending money makes people feel good. Having the best things (or what is perceived as best) makes people feel good. So while you're wife may not need that $400 purse, it makes her feel good and while you're sister in law doesn't do more with her iPhone than she would with a feature phone, it makes her feel good to say she has one.

26. tedkord

Posts: 17414; Member since: Jun 17, 2009

Got another sister in law who's like that. Didn't pay her rent one month because she bought a $600 dog. Other times skipped bills to buy other useless items just to have them. I don't know, I'm just not like that. I bought a house that was well within my budget (not a huge house), I refuse to build up major debt - mainly because I want to not have to work until I'm 80 or drop dead, whichever comes first. I like having toys, but I won't buy something like that unless I can pay outright without shorting the mortgage, or electricity, water, gas, etc...

31. remixfa

Posts: 14605; Member since: Dec 19, 2008

lol.. ted.. my wife is the same way.. she's coach nuts.. and she buys those crazy stupid purses.. its a guy thing i think. i could get one of those $1 canvas pouches from publix and do the same thing that her $300 purse does... ill never understand. lol

28. cellphonator

Posts: 298; Member since: Oct 29, 2011

@ Clevername. Maybe you should write a double post just to make sure he, the "economically speaking" poster understands it completely.

44. bayusuputra

Posts: 963; Member since: Feb 12, 2012

haha, the terms overcharging and high profit margins themselves comes from economics, how can you say that it is impossible to overcharge something economically speaking.. if you said historically or biologically speaking, then yes, it is impossible..

3. clevername

Posts: 1436; Member since: Jul 11, 2008

Love or hate apple, you gotta wish you owned stock in the company.

4. darkkjedii

Posts: 31310; Member since: Feb 05, 2011

Exactly,I know I wish I did. People harp on apple for doin big business... Isn't that what a capitalistic America is all about? Get off apple,and go bug exxon.

14. HTCiscool

Posts: 449; Member since: Jul 16, 2011

That's like saying you with you'd invested in Cocaine in 1980 and hid it in your basement. You'd make a lot of profit but...

19. clevername

Posts: 1436; Member since: Jul 11, 2008

Kinda wish I did invest in cocaine! Sh*t makes money!

32. remixfa

Posts: 14605; Member since: Dec 19, 2008

howa bout if i invested in it from 1990 on? heroin was all the rage then.. cocaine probably took a downturn then.. now its all the rage gain..lol

36. clevername

Posts: 1436; Member since: Jul 11, 2008

That's what's called minimum investment, maximum return!

37. jamrockjones

Posts: 345; Member since: Oct 26, 2011

It's true, but it gets to the point of just being unethical, charge what you want if people are willing to pay, but how about upping the pay for the workers who produce the device.

35. AhmadAlsayegh

Posts: 326; Member since: Jul 18, 2011

shares with a company that does not give shareholders dividends? no thanks! i'd rather buy microsoft shares at 30 bucks, and get 0.17$ for each share

5. jmoita2

Posts: 930; Member since: Dec 23, 2011

Screw that!!! I would never own Apple stock. It's kind of like looking at a very profitable mining operation that uses child slaves in those hell on Earth places in Africa,and wishing you had a piece of the action.

10. squallz506

Posts: 1075; Member since: Oct 19, 2011

or telling your accountant you want to invest in meth futures

29. iWallE

Posts: 48; Member since: Oct 10, 2011

@jmoita2. Not really. Actually many other companies use workers in an even uglier way than Apple does. It's just that people don't know that, because these companies aren't as much in the spotlight as Apple is. Truth be told, if you really feel like you say, you probably shouldn't buy any consumer electronics. If that's not the case, than I see no logical reason to judge Apple more than anyone else. Yes, success provokes hatred and I sometimes also hate Apple for destroying competition and trying to rule the market. But trying to find an excuse for your opinion and feelings is unnecessary. All big companies follow more or less the same models (or at least they try to).

6. christianqwerty

Posts: 467; Member since: May 05, 2011

Before you go bashing apple for that horrible labor, why don't you look at the things you use and eat everyday. Many other companies are guilty for the same charge, It doesn't make it okay, but apple isn't the only one

12. bigboy029

Posts: 74; Member since: Jan 03, 2011

sorry but nobody on this site understands that. It's only Apple, of course.

21. tedkord

Posts: 17414; Member since: Jun 17, 2009

We all understand it, but since Apple profits the most from it, they have more of a responsibility to ensure it changes. (Or, *gasp*, produce the phone in their own country, for decent wages - there's plenty of room in that profit margin for that! Maybe support your own country and citizens)

30. iWallE

Posts: 48; Member since: Oct 10, 2011

Apple produces in China not (only) because of the low wages, but because it's easier. What US company could turn its production schedule upside down overnight, because someone at Apple made a change to the product in the last moment?

25. TechnoTechyes

Posts: 71; Member since: Jan 24, 2011

Response is to BigBoy I don't think you get what people have an issue with. People are extremely mad at Apple, because they are holding technology hostage. They have patents for swipes and hot spots (on a mobile device). To be honest the patent office should never grant such patents, but they did, and Apple is using that to stop technology from progressing outside their company. Google has supported Apple products for a long time, in the meantime Apple has attacked Google's partners. Someday that'll give (maybe tomorrow). And Google will turn off YouTube, Google Maps, and Google Search on iProducts and even Safari.

33. remixfa

Posts: 14605; Member since: Dec 19, 2008

to iwalle.. if apple offered an american company a multi billion dollar a year contract, they would turn as fast as they could as long as it was ETHICAL.. which is apple's biggest problem.. they dont care about ethics.. only about profit margins.. Techno, apple is holding very little actual technology hostage. they are hoding a swath of bullcrap patents that they never should have gotten hostage.. that + bar nakpin drawings. If google were to act like apple for 1 day, apple would feel the rath, as most of apple's best apps go through google at some point or another.

41. downphoenix

Posts: 3165; Member since: Jun 19, 2010

Cant wait for this day to come, this will be a wakeup call to the lesser ifans out there. We'll be seeing a lot of Android converts soon. Google doesn't play ball that way, and I doubt they will in the near future unless Apple continues its sue happy ways perhaps.

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