Apple Makes A 64% Gross Margin On The iPhone X

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Apple Makes A 64% Gross Margin On The iPhone X

Akshay Bhalla

If you’ve ever wondered how much the iPhone X costs, then you must have also wondered how much of a margin Apple makes off of its price tag. It comes in at around INR 19,000 to make an iPhone 8 which is at least a 63 percent margin off of the INR 64,000 price tag. Apple’s most expensive iPhone ever costs INR 89,000 in India for the 64 GB model and costs a little over INR 1 Lakh for the 256 GB model. 

Apple Makes A 64% Gross Margin On The iPhone X© MensXP/Naasir Jamaal

TechInsights, an engineering research organisation estimated the cost of manufacture for the iPhone X. Currently, it costs Apple INR 24,000 to manufacture the base model of the iPhone X. The difference is not that much when compared to the iPhone 8, however, the shocking part is the retail price of the phone. According to the engineers, the iPhone X has the highest gross margin per unit sitting at 64 %. The gross margin does not include other costs such as R&D, overheads and labour, however, it is still significantly higher than the iPhone 8. 

Apple Makes A 64% Gross Margin On The iPhone X© BCCL

When analysing each component of the iPhone X, the new 5.8-inch OLED display is the most expensive part of the iPhone X. It costs Apple around $65.50, compared to $36 for the LCD display on the iPhone 8. 

Another additional cost for the iPhone X is the stainless steel chassis that has been touted as one of the most attractive attributes on the iPhone X. It costs Apple another $36 for the stainless steel design whereas the iPhone 8 uses aluminium housing that only costs $21.50. 

Apple Makes A 64% Gross Margin On The iPhone X© Apple

Tim Cook, at an earnings call last week, commented on the iPhone X’s heightened price and said the company charges for the value the iPhone X provides to consumers. Cook noted that Apple sees the iPhone X as offering new technologies to consumers that are “leading the industry.”

“In terms of the way we price, we price to the sort of the value that we’re providing. We’re not trying to charge the highest price we could get or anything like that. We’re just trying to price it for what we’re delivering. And the iPhone X has a lot of great new technologies in there that are leading the industry, and it is a fabulous product and we can’t wait for people to start getting it in their hands” he said. 

Do you feel that Apple should have kept a lower margin in order to make the iPhone X more accessible?  Let us know what you think about Apple’s strategy in the comments below. 

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