While the iPhone 6 is available in the US on contract, starting at $199, this does not reflect the true cost of the device. Off contract, the price for the phone is something closer to around $650 for the 16GB model, and up to at least $800 for the larger 128GB model. However, this again is the just the price which Apple charges for the phone, not how much it costs the company.
To get a better idea of the true price of the iPhone 6, we need to first look at the parts it is made of. Since the first day the iPhone 6 was released, a number of teams have undertaken teardowns on the new phone, providing detailed information on the different components used within the device. From this we can ascertain the raw cost of the iPhone 6. As a sum of its parts the phone is reported to cost around $200.
So then, if the phone costs $200 to make, is Apple making at least $450 profit on each device? Probably not. In addition to the labour and material costs, the company also spends large amounts of money of Research and Development, which would account for a significant portion of the phone’s price. But this is still not the biggest cost Apple has…
At least $100 out of the total price of the iPhone 6 is spent on telling us why we should buy it.
People buy Apple products, not because they are quantifiably better than their competitors, but because they are well marketed. Apple spends millions annually on advertising. From its trademarked Apple Stores, to its huge billboard advertisements around the world, and even its collaborative advertising with celebrities (like U2), the company drives a massive global marketing machine.
And this marketing is very expensive. Possibly at least $100 out of the total price of the iPhone 6 is spent on telling us why we should buy it. With all of this summed up, it is likely that Apple spends around $300-400 on each iPhone 6 sold, meaning that on an average model of the phone, it is almost making almost a 50% profit margin on each device sold.
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