$999 iPhone X Costs Apple $357 To Make With Gross Margin Higher Than iPhone 8
There was a fear that Apple’s pricing structure for iPhone X would encourage prospective buyers to purchase iPhone 8 or iPhone 8 Plus in order to save money. Or, even worse, force loyal iPhone users to move across to a premium Android device, such as a Samsung Galaxy, to avoid having to part with the $999+ for iPhone X ownership.
Initial reports suggest those fears were unfounded with Apple’s new flagship flying off the shelves, but today new information has emerged outlining exactly how much iPhone X costs Apple to make, with entry-level costs sitting at around the $357.50 mark, as reported by Reuters.
Anyone who has purchased a 64GB iPhone X – which is classed as the entry-level model – either in Silver or Space Gray, will know that particular model sets them back $999.00. If you take a manufacturing cost of approximately $357.50 then Apple is looking at a tidy gross margin of around the 64-percent mark for every single unit sold.
In reality, there are likely additional and embodied costs involved in the R&D, design, production, and marketing of the device that aren’t factored into this figure, but the margins are extremely healthy for this new device. The margins are said to be also slightly healthier than those of iPhone 8, which sits at around 59-percent.
The rise in cost to manufacture iPhone X compared to iPhone 8 can be attributed to a number of more expensive components and processes used during iPhone X production. The brand new OLED display is definitely the most expensive part of Apple’s new flagship, costing $65.50 per panel. By comparison, the 4.7-inch LCD panel which adorns the iPhone 8 cost just $36.00 per unit. Apple knew switching to OLED technology would cost more per display, but it’s definitely worth the cost when you consider the quality of iPhone X, and even more so when that cost can be passed onto the consumer.
The more premium stainless steel chassis of iPhone X also took that particular component cost up from $21.00 for the aluminum frame on the iPhone 8 to $36.00 for the iPhone X. All-in-all, a more premium device with more expensive components ultimately ends up costing more for the consumer.
It would be extremely interesting to get Apple’s take on the pricing breakdown and actually get the true cost of manufacturing and getting a single unit to market based on all internal costs faced by Apple, which, unfortunately, we know will never actually happen.
What do you think of these published costs? Does it put you off an iPhone X purchase?