Since its release, the iPhone X has managed to be more successful and popular than the previous models. The all screen smartphone starting price is $ 999 but can go up to $ 1,449 in case you decide to go for the 256GB version. This clearly shows that they aren’t cheap, but there are many ways that the company can ensure that the prices are tolerable. So, how much did it cost the manufacturers to make these particular versions?
The cost of manufacturing iPhone X
A cost analysis by the IHS Markit shows that the 64GB storage iPhone X cost Apple just $ 370 per device to manufacturing. Previous versions of iPhone 8 and iPhone 8 plus, cost the company less compared to these versions of premium mobile phone. The iPhone 8 manufacturing cost is $ 247.51 while that of iPhone 8 plus is $ 277.66. This is a clear indication that the iPhone X models are in fact more expensive to build than their predecessor versions.
So, it is easy to jump into conclusion that Apple must be making a gross profit margin of $ 629 if it cost the company $ 370 to build the iPhone XS. However, we all know that Apple can’t be pocketing a 63% profit from these iPhones. If they are really making profits of more than 60% from these models in addition to the new release iPhone 8 and iPhone 8 plus, then they wouldn’t be reporting profit margins of around 38.5% in the current quarter. It should be much higher than that.
It is important to factor in the research, designing and planning that the company undertook so as to understand the pricing of the iPhone XR. So, why is this particular mobile phone model costing the company this much?
The Reasons for the High Manufacturing Cost of iPhone XR
The cost of the design and development of the iPhone X explains the reason behind the high manufacturing cost. For example, the iPhone XS Max’s display is the most costly component of this phone versions and accounts for $ 80.50 of the total manufacturing cost. This means that Apple had to pay an extra $ 3 for the 6.5-inch display used to design XS Max as opposed to 5.8-inches used for the previous 2017 iPhone X models.
Also, an independent cost analysis company, TechInsights, suggest that the company had to remove some part of 3D Touch in the phones display that added the cost by $ 10.
The processor, modem and flash memory used to build the phone are also expensive. For the 64GB to 256GB memory upgrade, the company used an estimated $ 20 and thus as a buyer you will have to pay an extra $ 150 for the same jump regardless whether you choose an iPhone XS or XS Max. However, you will have to pay an extra $ 200 from the 256GB models for the 512GB tier.
The 512GB upgrade by the company will ensure that they make approximately $ 134 more per each device compared to the 256GB. But, this isn’t a surprise because Apple has been using this strategy since the first day they made an iPhone.
The second factor that makes manufacturing of this phone expensive is the assembling of the materials and components that are required in building them. Most of the components will come from many companies across the world that are subcontracted to Apple.
So, the cost the company had to incur in manufacturing the iPhone X can be the reason behind the high cost of this model. They had to dig deeper in their pockets to make the required upgrade which ensure that this model offers better features than the previous versions.
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About Amit Shaw
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