Over at Gizmodo they've posted a ton material on the iPhone. Here's one (they didn't write it) about the material cost of the iPhone. Bottom-line is an estimate of $200. "What if costing" is fundamental in procurement, and one of the main tenets of the technique is to understand what bits of the cost equation are you estimating and what, if any, relationship that has to pricing. With the iPhone retailing at $600 give or take, I would suggest that "what the market will bear" factored more heavily in the pricing discussions than the material costs. But even so, the guys at Giz suggest that consumers should be a bit taken back by Apple's profit. The real cost of the iPhone is probably somewhere north of $400, even without allocating any development costs to the product.
Material cost
Logistics (transportation, handling, inventory)
Retail costs (labour, facilities)
Advertising & Marketing
Support costs (how do I activate this dang thing?)
Warranty costs (shipping, handling, labour, parts)
etc, etc
Rough numbers, this type of equipment often runs about 50% material and 50% other costs (again not counting any development costs). Is $600 a fair price for a $400 phone? My buddy Mike says yes, and who is a lowly buyer to argue with that?
Cheers,
David Rotor
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Total cost of ownership includes the opportunity cost of having to buy the AT&T contract. Lots of folks unhappy about that.
ReplyDeleteFolks figure Apple's profit margin is fattened considerably by a payment from AT&T.
It's Steve Jobs' world; we just live in it. I didn't buy an iPhone, but I went to _Ratatouille_!