Why are iPhones getting so expensive?

Why are iPhones getting so expensive?
Apple's CEO Tim Cook has famously said that he had seen many iPhone teardowns or bill-of-materials (BOM) estimates, but nothing was even close to what it really costs to concoct, develop and assemble one unit in total costs over time. Still, even if we assume 30% extra costs over the $390 in components and assembly that go into an iPhone XS Max, for instance, that still leaves Apple a healthy margin which has propelled it to the world's richest company status.

Apple, however, is a very disciplined manufacturer and doesn't jump on every novelty that Android makers stuff into their flagship models. It picks and chooses, waits for a technology to mature, prove itself and fall down in price, then jumps the gun with mass implementation and production. This has allowed it to constantly keep its operating margins very high compared to other companies.


Nowadays, though, even Apple is not immune to the breakneck pace in the mobile industry that forces phone makers to cram an increasing quantity of complex technologies in their handsets, both legacy and new ones, in order to stay competitive. The unique TrueDepth camera kit used for FaceID on newer iPhones comes to mind, as well as their OLED displays that are a great technology which, however, Samsung has near-monopoly over and can set triple the panel prices compared to the times when Apple was only having LCD models.

These have pushed the iPhones' BOM estimates ever higher, as you can see from the chart, and, consequently, the price of Apple wares for the end user has suffered. This is probably valid for all other manufacturers of $800+ handsets that have made the phone price mission creep in the last year or two, but usually, we only get detailed cost breakdowns for iPhones, and they are pretty illustrative for this vicious circle unpleasant trend.



Related phones

iPhone XS Max
  • Display 6.5" 1242 x 2688 pixels
  • Camera 12 MP / 7 MP front
  • Processor Apple A12 Bionic, Hexa-core, 2490 MHz
  • Storage 64 GB
  • Battery 3179 mAh(25h talk time)

FEATURED VIDEO

43 Comments

1. scarface21173

Posts: 702; Member since: Aug 17, 2014

Apple need 60+% mark up on there products simple as that. They are now copying top Android devices with there screens ram etc which has pushed production costs a lot higher.

3. thxultra

Posts: 472; Member since: Oct 16, 2014

Honestly think the copying goes both ways...

5. NoToFanboys

Posts: 3231; Member since: Oct 03, 2015

Yes it does go both ways, but you know how fanboys work, totally narrow minded.

19. thxultra

Posts: 472; Member since: Oct 16, 2014

I agree also on both sides of the fence though. I have had both Android and Apple phones and there are things I like about each. I really like competition because we get a better product in the end.

25. Atechguy0

Posts: 918; Member since: Aug 03, 2018

If you like competition you only get that with Android OEMs. You do not get any competition with Apples iOS platform. Apple dictates every aspect when it comes to their iPhones, software, and app ecosystem. So once again there is NO competition in Apples controlled wall garden. You want proof of that. Every Android oem includes fast chargers in their boxes now. Even mid range and low end Android smartphones include quick chargers. You have to buy that separately for any of Apples iPhones. Look at the repair or service costs for Apples iPhones. It's just ridiculous because Apple knows you have to pay what they want. Even if you buy Apples care service, which is ($200 USD). You still have to pay $130 USD on top to fix the glass back of an iPhone XS if you have Apple care. If you have no Apple Care you have to pay $550 to fix the back of an XS, or $600 for the XS Max. No Android oem comes close to charging those prices. If the glass back is broken on an S9 it will cost you less than $100 to fix it through 3rd parties, or $80 at a Samsung store. Like I said when it comes to Apples iOS, there is no competition in the Apple camp.

33. thxultra

Posts: 472; Member since: Oct 16, 2014

Android in itself is competition to Apple. Part of the give take with Apple is they control the whole ecosystem. With Apple you are assured of OS updates on day 1 with Android Devices you may get updates for the first year and not on day one unless you have a pixel phone. You also get a certain levil of quality control since apple controls which apps can be installed. Apple also doesn't have to make the os run on as many devices so it can be more efficient. The flip side is Android can be more customized, You can run Apps not approved by google and you have more hardware choices with Android. My whole point is both have pros and cons. If you think Apple is too expensive by all means by Android nothing wrong with that. Once again competition. Enough people do this and Apple will lower their prices or lose customers. For now however enough people think Apple and Samsung phones are worth the premium price.

38. LordDavon

Posts: 179; Member since: Sep 19, 2011

The Samsung Galaxy S9 is $229 for the glass repair and $99 for the back. That is both at Samsung and uBreakIFix. The iPhone X is $279 for the front glass and $99 for the back. I called uBreakIFix and they said that the XS and XS Max are too new and they don't have exact numbers yet, but the XS will cost roughly the same as the X and the XS Max a little more. I've been trying to decide between the iPhone XS Max and Galaxy Note 9, so when I read the numbers you put out I thought that it was a huge deciding factor for me to go with the Note 9. I decided to verify the numbers and found that the repair costs between the two are close to the same.

2. thxultra

Posts: 472; Member since: Oct 16, 2014

Because people pay it. Same is happening with Samsung phones as long as people will pay the higher prices these companies will continue to increase them. Eventually people will get tired of it and prices will start to come down just like with computers, Blu Ray players etc...

4. TheOracle1

Posts: 2340; Member since: May 04, 2015

Your chart contradicts the whole article and Tim Cooks b.s. What I see is an increase in costs from about $200 to $450 and an increase is selling price from about $650 to $1,500. The only thing Apple have increased disproportionately are their outrageous profit margins.

6. dubaiboy78

Posts: 457; Member since: Sep 19, 2014

Apple is greedy as hell!!!

39. darkkjedii

Posts: 31597; Member since: Feb 05, 2011

What for profit company isn’t? Apple is just the best at it, thus a trillion dollar company.

7. WingMan

Posts: 263; Member since: Mar 28, 2008

Considering Apple doesn't have a factory is it still a manufacturer?

10. SIGPRO

Posts: 2817; Member since: Oct 03, 2012

Fruit phones are just Chinese phones like many others!

11. worldpeace

Posts: 3135; Member since: Apr 15, 2016

Didn't they have factory in Texas? (not sure if it's in Austin or Arizona)

8. japkoslav

Posts: 1552; Member since: Feb 19, 2017

"Why are Phones getting so expensive?" It's really easy: Because you will buy them ... End of story.

9. redmd

Posts: 1948; Member since: Oct 26, 2011

People whine a lot about anything these days and yet they gave in.

12. Tipus

Posts: 905; Member since: Sep 30, 2016

Fool and his money are soon parted :)

13. JCASS889

Posts: 607; Member since: May 18, 2018

i think its because if apple lowers the price of the newest phones compared to last gen, people will believe that its of lesser quality. so for apple to make you think that its more premium than last year is to raise the price regardless of innovation or improvements.

14. MarvzIsFallen

Posts: 646; Member since: Aug 11, 2017

Well maybe people are rich to keep buying apple’s products even if it high in prices. Its resale value, software and hardware integration, seamless connections between devices, operating system, post services, icloud, apps and app store, and premium design are the ones that make the iphone a better choice than others. Also this is the status symbol for some and people started planting iorchard in their homes. Apple products is the greatest tech out there. Now if you can’t afford to get it, then there are many choices out there. But if you really want apple products, then work and save money.

15. JCASS889

Posts: 607; Member since: May 18, 2018

if you believe apple to have the greatest tech out there then im sorry to say but you are brainwashed big time.

16. OneLove123

Posts: 1257; Member since: Aug 28, 2018

They can set the price at $5000 and people will still buy it. It’s not Apple’s fault if the consumers are willing to spend their money.

18. NarutoKage14

Posts: 1346; Member since: Aug 31, 2016

Profit.

20. STRANG3R

Posts: 234; Member since: Sep 24, 2015

Answer is : GREED

21. Sakeem

Posts: 865; Member since: Sep 05, 2012

They continue to rise in price because people are willing to keep purchasing them despite said rise in price. I wouldn't give up trying to make as much profit as possible either.

22. L0n3n1nja

Posts: 1584; Member since: Jul 12, 2016

It's simple, Apple has share holders to keep happy, they expect record profits and increasing profit margins. There's a reason they're too cheap to include a fast charger.

23. gjkiii

Posts: 41; Member since: Oct 25, 2013

Because of the monthly payment options. Apple can keep rising the price and it only goes up a little each month for people. People don't look at the big picture just what their monthly bill will be.

24. apmsequeira

Posts: 3; Member since: Sep 27, 2018

Because Warren Buffet said so... But he can have as many iPhones as he want... For the commun people, those who made Apple great, I think it is increasingly harder to justify why the margin profits grow higher than the production costs...

26. doublestandardz

Posts: 103; Member since: Jul 06, 2018

its simple. some people want statusy fruit phone. some people want the best cohesive ecosystem and effective integration. some people, like me, buy it b/c they use the best quality parts. nothing is half azz about apple hardware. I am an android os person first but use apple x b/c it is simply the best quality phone out there. apple knows this and capitalizes off it. As much as i despise face id, i still use my x at the end of the day, until something better from android comes along. pixel 3???

27. LouisMariano5

Posts: 63; Member since: Sep 22, 2014

when phones become as expensive as laptops that seems ridiculous.... youre a trillion dollar company start using your resources to come up with a way to mass produce all this "expensive technology" at a lower cost and pass it on to your customers... thats the way to get people to buy your phones and to attain and keep loyal customers... When you have been an iPhone customer for years, apple telling you "hey loyal customer heres our next offering to your for 1200.00" To me that is treating your customers like SH&T.... apple should come up with something better and DO BETTER

28. foldablephone

Posts: 60; Member since: Sep 19, 2018

I have an iPhone 7 (Red 128GB) which I got on Black Friday 2017 for $399. I’m gonna hold on to this device for as long as I can because there’s no way I’m paying 2-3 times more to upgrade to an X model. My 7 is still fast, has 3D Touch, iOS 12 (will get 13 & 14), 4K video recording and can use one handed. Apple are gonna struggle to get customers like me to upgrade because 2017 seem a huge shift in price that is difficult to justify.

Latest Stories

This copy is for your personal, non-commercial use only. You can order presentation-ready copies for distribution to your colleagues, clients or customers at https://www.parsintl.com/phonearena or use the Reprints & Permissions tool that appears at the bottom of each web page. Visit https://www.parsintl.com/ for samples and additional information.