We’re All Getting Screwed
Common sense has always told us the cost to build an iPhone was probably a lot less than what we pay for it. How else could they justify knocking a $600 phone to $200 if you add a two-year plan to your cell service? That’s like Sony giving away free Playstation 4s with a subscription to their Playstation Network.
Now we have an estimation on what the parts and labor actually are and we are still getting dicked pretty hard. Apple let ABC into their China factories for an upcoming special. Using the information from that footage, Horace Dediu did some math and came up with the cost to build one smartphone.
Those costs are likely to range between $12.5 and $30 per unit.
Labor costs are still a small part of the overall cost structure at between 2 percent and 5 percent of sales price.
The high level (141 steps) of human interaction in the process could be automated. However, the fact that it isn’t implies that the cost of automation would be higher and the flexibility of the automated process would be lower.
At most, $30 to make. And we pay $200-$600. That’s like, a bizallion percent markup. Or something like that. I don’t like math.