According to a recent price teardown analysis, the Apple iPhone 6s Plus retails at more than three times what it costs to make, showing that Apple is getting away with something resembling highway robbery for its smartphone sales.
The research was performed by IHS Technology, a leading resource in research, analysis, and strategic guidance in anything tech. Their findings showed that it costs Apple just $236 for every iPhone 6s Plus phone they produce, but they sell each device at $749. That equates to a 217.4 percent markup.
Though Apple did not release this cost comparison themselves, IHS pulled apart the most recent iPhone to develop an analysis of what it would cost to purchase and assemble the materials. The research firm also estimates that the iPhone 6s, the smaller version of the device, costs just $20 to make per device, but it's significantly more affordable than the larger device. It just shows that Apple dominates the market here, and they can get away with virtually anything.
IHS Senior Research Director Andrew Rassweiler admits that the data they collected has its limitations on accuracy. Though their teardown was likely correct based on their extensive research and experience in this matter, it doesn't take into account all of the costs associated with developing and distributing each iPhone.
The mass production of these phones isn't cheap, with extra expenses including shipping, warehousing, research and development, marketing, and more. Without diving into Apple's personal (and likely sealed for the time being) expense records, IHS can only speculate about whether or not the company's high asking price is a reflection of production costs or if it's simply a reflection of the brand name.
Still, this assessment provides us with some idea about what the company prioritizes with their spending and what's costing the most in production. The extra amount that they're spending seems to be going toward their marketing strategy. Everyone knows that when you purchase a brand name item, you're spending a significant amount more for the brand and all the marketing costs that come with that.
Overall, it appears that longevity is the ultimate goal for the makers of the iPhone 6s Plus. They've included a number of features to make the phone more durable and longer lasting than previous models so that it will maintain its value for a longer period of time and make the high price worth it to their customers. The company knows that despite its name, people will stop buying their products if the phone doesn't live up to its value.
For starters, the larger screen size of the Plus requires a better battery life. The new phone actually has a smaller battery than the previous model at 2,750 mHa, but it includes several new power-saving features and processors that excel at improving the lifespan.
The aluminum frame is also stronger on the Plus with a Gorilla Glass 4 screen and better water-resistant seals. These additions mean that the phone can withstand much more damage than previous models, and that if you accidentally drop it in the toilet or bathtub, you should be able to fish it out and wipe it out without any noticeable damage.
There's also an upgraded camera with the 3D Touch feature. This makes it possible for users to do different things with their camera based on the amount of pressure they put on the screen. It also uses 12 megapixels rather than 8, making it as good as a regular digital camera. The camera and screen cost about $52.50, according to IHS, and it's the most expensive piece of the device.
The new iPhone also comes with a variety of choices for storage, and they charge an additional $100 per step up in memory capacity.
Andrew Rassweiler, senior director of cost benchmarking services for IHS says, "NAND Flash is now so cheap it's almost irrelevant, but Apple monetizes this difference with consumers, to the tune of $100 for each additional step up in memory capacity. For example, a 64 GB iPhone now costs Apple about $17 more to make than a 16 GB iPhone, but Apple charges iPhone buyers $100 more for the increased memory."
Despite the vast markup and the increased value of their phones, Apple will continue to get away with the exorbitant prices simply because consumers will trick themselves into believing that the longevity and good quality of the device are worth it, even if it means giving up a kidney to get it. Consumers have come to trust the name of Apple, and their unmatched customer service and support system make the excessive price of the Apple iPhone 6s Plus feel worth it to them.
[Image via Stephen Lam/Getty Images]