Cost of the iPhone5

I chose to find an article that was about one of the hottest new gadgets out, the iPhone 5. After all of the preorder hype and now being back-ordered it is one of the hottest products to enter into the marketplace right now and a must have for apple followers. Apple has done a good job on maintaining a steady consumer following with their products. One good example of this is the change from the 3g to the 3gs and the 4 to the 4s. In both cases there were only small a minor improvements but yet still very popular and appealing to Apple lovers. The iPhone 5 is completely different in both looks and the interface. This article points out the exact costs on the $600+ phone and questions how Apple plans to make up on the loss when customers choose to sign a new 2yr contact. This article starts by listing all of the costs that go into making the iPhone 5 16gb phone which caught my eye because some of the features that I thought would have been cheaper to make were actually fairly well priced. The one cost that seemed high was the price to get the phone put together! (kidding) But the main reason I thought the iPhone 5 would be cheaper to produce was because it is made in China and not only does it cost less to produce each piece the labor is dramatically cheaper over there. The article moves on to talk about how the phone without the contract sells for over $600 and that is where Apple will make its money. That markup is normal considering the phone costs $207 to make at the end of the day, labor included. At the tail end of this article it does disclose the cost of the iPhone 4S which  (without labor) was $188. I found this interesting too because the 4S compared to the 5 is dramatically different and the screen is just one of the noticeable changes. Hopefully Apple will have a successful launch with the iPhone 5 and there will be minimal bugs. Check out the article when you have a chance it is fairly short but jammed with very interesting information and the full list of the cost of each feature in the iPhone 5.


15 thoughts on “Cost of the iPhone5

  1. The amazing thing that apple has done over the years with their iphones is to get such a loyal following that people are always going to want the newest product they offer. I’ve had my iPhone 4s for less the 5 months now and as soon as apple announced the iPhone 5 i wanted it. I can’t explain why this phone appeals to me or why i even debated on buying it, but i want it. Luckily with this pricing apple has made it impossible for me to afford without a new contract so i wont be wasting my money on something that i don’t need at all.

    I do find it rather amazing though that apple is selling the phone for cheaper then what they make it for. This strategy works for things like the xbox 360 and ps3 which plan on making most of their money through their game and not the systems. But apple knows that many people want this phone no matter what the cost is.

  2. I agree with you when you say it is surprising that some features were more costly then expected. It is very interesting though how Apple has continued to make a new iPhone about once a year, and customers continue to purchase the new model, even though their current iPhone is still in good condition. I think that Apple does a good job at creating more needs for us as consumers. As in they create new apps (such as the new app called Passbook) and make consumers feel that they need that app in order to be more organized or work more effectively.

  3. For starters Apple has done a great job on not only creating a product that a handful of loyal customers want but creating a product that causes customers to want it. Having a steady profit coming in from the mark up of the iPhones through the unlocked versions and the contracted ones from the cellphone providers. Apple has, like any other company, trying to find ways to lower their production prices. To accomplish such reductions Apple has set forth a plan, as was put out by Forbes Magazine in April 2012, to use its extra billions of dollars it has to purchase their supply chain.

  4. I agree with the comment that Apple customers are willing to pay pretty much anything for their products. The one thing I would never give up would be my cell phone, which I am sure other people feel the same way. I feel that they are worth more than what they are priced at just because I could not imagine living without one. For some people price may be an issue and Apple knows exactly what to do to target those people. Spending billions of dollars in supply chain will increase customer loyalty.

  5. This iPhone will be my first iPhone, but I have had the iPad 2 for over a year now. I think this is the reason why I must have the new iPhone now. Apple’s stock has been growing at a very consistent rate. The reason why they are the most profitable company is because the demand for their products is so high that they can charge any price they want for a relatively low costing product to make.

  6. Apple products have to be the most trendy of our generation. Like said before, the can charge pretty much whatever they want because they know people will pay a premium to make a statement about themselves and their standing. Do iPhones really perform that much better than an Android or Windows phones? Not really. Apple just has dominance on the mobile market because they were the first to push the idea of purchasing “apps” and now third party publishers will always develop their apps for the iPhone operating system. Owning an iPhone is just convenient. It will be interesting to see what Apple does in the next couple years considering their enormous cash reserves and increasing stock price.

  7. To be quite honest, it does not surprise me that Apple’s cost is that high to produce each unit. Apple provides tremendous quality in the design of their products. When having such a loyal customer base, they can definitely afford to purchase quality pieces for their devices. At this point in time, Apple does not need much proof to know if their next product will be successful or not. The high cost for Apple to produce each product shows that they are making a quality device that customers will love.

  8. Does the increase level of functionality justify this high of a price for a cell phone? Apples China manufacturing process is likely not significantly different from previous generation phones. Therefore the higher price has to be warranted by the increased functionality.Although I am for technological advancement I will hold off acquiring the iPhone 5 until I can justify spending that much money for functionality I might not need. As well the first quantities supplied may contain “bugs” due to potential changes in the manufacturing process.

  9. To say that the new iPhone is the “hottest new gadget” out, I think would be an understatement. I have a hard time understanding why people go so crazy over iPhones and apple products in general. Apple products are good quality products, but the way people go crazy for them is just over the top. I saw people waiting in line from the middle of the night just to get their new iPhone 5. I understand that people really like the products and clearly are very brand loyal, but how far is too far? Spending the night waiting in line just to be among the first to get the latest apple gadget seems way over the top, at least to me. However, I will admit that Apple has done a great job pulling in their target market of customers and giving them their moneys worth, which might be among the reasons why people react the way they do over them.

  10. There is no doubt that Apple is possible the greatest electronic brands out there. Its great products have gain the loyalty of many customers. After looking at what it costs to produce an iPhone,I can see why the quality of their products is so good. I believe that customers are willing to spend the money because they know they are going to get what they payed for an outstanding product that wont disappoint them.

  11. @ Suzy

    I used to think the same way about why people are so obsessed with apple products…then one day I decided to buy Mac pro and I was in love with it. I love the build quality and the polished OS. I follow Apple very closely, but I agree Apple’s following is mostly intense.

  12. I agree with the fact that Apple Inc. has a very strong and very loyal customer base and that is most likely why the prices of their products seem very reasonable to their customers. When purchasing any Apple product, such as the iPhone5 in this case, people know that they are going to be getting a reliable and high quality product. Apple is constantly improving their products, even if it is only little by little, and their are minimal amount of “bugs” found every time a new iPhone is released. Also, the sleekness and polished design of all of their products is also very appealing to the public.

  13. The recent popularity of devices such as the loyalty card and customer benefits continues into the technological market. Apples use of such a mentality is what has ultimately kept it expanding over the years and has kept “apple lovers” spending. Nowadays many other phone companies can boast phones that are faster, with the same type of apps, and even an almost identical product appearance. However, the nature and style of the iphone, despite it’s cost and contracts, continues to prove effective on an almost annual basis. It seems that Apple will be around for many years to come, ensnaring more “customers” and producing slightly different products every year.

  14. Just as everyone has pointed out here, Apple is a wonderful product. I have yet to meet a person having a bad experience or complaining about an Apple product he or she recently purchased. I feel that the number one factor into the success of this company is not just the quality of the products, but the way Apple markets and advertises their product. The commercials on TV, for example, are so unique compared to other cell phone providers. When I watch these advertisements I can’t seem to look away because I just want to know and see how see this product work/ functions.
    As a result, they built customer loyalty and continued to keep the loyalty with the performance of their products. I feel that this effect creates the thought of price is not an issue when it comes to Apple. Genius!

  15. I find it interesting that people are willing to camp out for days in order to be the first to own the new iPhone 5. The following that Apple has managed to amass is a testament to its marketing strategy. Not to say that their products are not of high quality or desirable. However, there is something alluring about Apple. It almost seems as though there is a cult of devoted followers of Apple. These are the people that Apple counts on to buy a new iphone, iPod nano, iPod touch, and now iPad every year. They care not for the planned obsolecence that has allowed Apple to muscle its way to the top of the industry. Sure Apple products have revolutionized markets and even created markets, in the case of the tablet market, but something must be said about the way that people clamor for the new version of a phone that boasts as the only difference a faster processor and a 8mp camera instead of a 5mp camera. The belief is that Apple’s success stems from their ability to develop products that consumers do not know they need. What is left to be seen is whether they can continue their incredible trajectory without Steve Jobs at the helm. If the case becomes that Apple no longer is the innovative company that it currently is, will they to sell the units that they have managed to sell recently or will their numbers dwindle until the only ones buying are the cult of Apple devotees.

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