Apple made a lot of headlines when it revealed the iPhone X in September. Although its breakthrough new design, innovative security technology, and wireless charging are its biggest highlights, its steep price point starting at $999 USD for a 64GB entry-level model and $1,149 USD for the 256GB variant make it the most expensive iPhone model to date. Meanwhile, market researchers often delve deeper into the company’s manufacturing process to determine the estimated cost it takes to assemble the new smartphone. The outcome of their study revealed that the flagship model noticeably has a much higher gross margin than its lower-priced sibling, the iPhone 8.
Research data reveals cost to produce an iPhone X
According to Reuters, the data collected by research firm, TechInsights, included information about specific components of the iPhone X that contribute to its retail price. Surprisingly, it was noted that the 64GB model of the smartphone only costs Apple an estimated $357.50 USD to manufacture. Given its MSRP of $999 USD, the company earns a gross margin of 64 percent for each unit sold. On the other hand, the Cupertino tech firm’s iPhone 8, which retails for $699 USD, carries a gross margin of only 59 percent.
The above-mentioned research group’s breakdown of the iPhone X components reveals that its 5.8-inch OLED display costs $65.50 USD, which makes it the most expensive part of the handset.
For comparison, the iPhone 8’s 4.7-inch LCD unit is priced at $36 USD. This variance is expected due to both the technology and limited availability of the OLED component. Moreover, the X uses a stainless steel chassis, while the 8 depends on a lightweight aluminum frame instead.
Tim Cook speaks out about the price
Now that the information about the Manufacturing Cost for their new device has gone viral, Apple’s Tim Cook made sure to defend their decision.
During an earnings call last week, Cook noted that “the company charges for the value it provides for consumers,” which is not “an attempt to squeeze every last cent out of a device,” as reported by 9to5Mac. Consumers should also consider that the manufacturing cost does not include the cost accumulated by the research and development of the new model.
Theoretically, Apple can still charge a lower price for the iPhone X and still continue to earn significant margins. However, it seems worth it to point out that despite the supposedly high price of the new smartphone, pre-orders have all sold out and demand for the new device is at an all-time high.
