Consumer tech products sell for more than their manufacturing cost. This is because people aren't just paying for the components and materials required to make that specific product — they're paying for research and development, software, licensing, and other costs, too.
So it should come as no surprise that Apple's $1,000 iPhone X, the most expensive iPhone thus far, only costs $357 to produce.
What It Costs To Make The iPhone X
When Apple unveiled the iPhone X's brow-raising price tag — it received a lot of criticism. Some complained about it being too expensive, while others speculated that the iPhone X marks the beginning of a new category of super-expensive smartphones. But that's a story for another day.
The iPhone X costs just $357.50 to produce. Apple sells a standard iPhone X model for $999, meaning it reaps a whopping gross margin of 64 percent, higher than its 59 percent gross margin for the iPhone 8.
The most expensive component of the device is the OLED screen, which is made by Samsung. That part alone costs $65.50, significantly higher than the iPhone 8's $36 4.7-inch LCD display. Why is Apple getting displays from its chief rival? Well, it's quite simple, really. Samsung's OLED display is currently the best in the market. Period. By contrast, LG's OLED technology is, well... odd, to put it politely.
Next up in the top most expensive components list is, unsurprisingly, the phone's stainless steel chassis, which costs $36, much higher than the iPhone 8's $21.50 aluminum housing.
Those are just some of the components making up the iPhone X. The camera, Qi wireless charging module, battery, the Apple A11 Bionic chip, and other smaller components all add to the total manufacturing cost.
It's More Than Just Manufacturing
It's important to keep in mind that while the iPhone X's manufacturing cost is just $357, that doesn't account for how much money Apple spent in research and development. Companies often spend millions, if not billions, during this stage. The iPhone X has a handful of new technologies such as Face ID and improved cameras. It's uncertain how much Apple spent testing, researching, and developing those.
Thoughts on Apple's higher gross margin for the iPhone X? Feel free to sound off in the comments section below!