TechInsights’ bill of material estimate of $357.50 for the baseline iPhone X model, which retails for $999, proves that it’s costing Apple more and more to make sophisticated new iPhones.
The 5.8-inch Super Retina display costs an estimated $65.50 versus $36 for the 4.7-inch LCD panel found on iPhone 8. The analysis also deemed the phone’s stainless steel chassis another pricey component: it costs $36 to build versus $21.50 for the aluminum housing of iPhone 8.
According to Reuters today, TechInsights has found that iPhone X is more profitable than its iPhone 8 counterpart. As a quick refresher, research firm IHS Markit back in September pegged the iPhone 8 bill of material at $247.51, and $288.08 for iPhone 8 Plus.
The baseline $699 iPhone 8 model has a gross margin of 59 percent, TechInsights says. Even though the flashier iPhone X parts cost Apple 25 percent more those that go into iPhone 8, the phone itself retails 43 percent higher which gives it a gross margin of 64 percent.
Broadly speaking, the gross margin is the difference between selling price and cost.
It is important to note that bill of material is an estimated cost of parts based on supply chain pricing trends: Apple often prepays billions to secure a steady stream of parts at negotiated prices. BOM also excludes many other costs associated with research and development, licensing, packaging, marketing, shipping, sales and so forth.
Tim Cook said during last week’s earnings call that Apple priced its flagship phone according to the value it’s providing. “We’re not trying to charge the highest price we could get or anything like that,” he said. “We’re just trying to price it for what we’re delivering.”
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