Tagged: cost

iPhone 6 Plus—A Gross Profit Model

Posted on September 24, 2014 by - Uncategorized

Tired of the iPhone 6 talk yet? Well, this isn’t a review, a critic, an article about hardware or operating systems, nor an essay on how Android has had many of the Apple upgrades for years. This is simply a piece informing the public of why the Apple stock continues to rise.

Apple will never cut costs when the consumer continues to buy.

Apple will never cut costs when the consumer continues to buy.

Apple is the most valuable company in the world. Add innovation to superior hardware and some amazing marketing, and one will see profits soar. But that, on its face, prima facie, would only get you into the top 100 on Forbes list, and large corporations always want to be number one.

In Adam Smith’s famed book on economic theory, Wealth of Nations, the “profit motive” is labeled as the single greatest driving force for any company’s achievements. This could not be any more true as it relates to Apple.

A recent study by AllMobilePhones.com outlined the cost of the iPhone 6 and the iPhone 6 Plus. The iPhone 6 costs $200.10 to produce and the iPhone 6 Plus costs $216.60. That’s only $16.50 more to make the larger version. Why are those numbers so significant? Because Apple charges you $100 bucks more for the iPhone 6.

No one is arguing Apple shouldn’t make a profit. But when you are already the most profitable entity in the world, maybe you could cut the consumers a break and only make $5 billion a day instead of $10 billion.

Devil’s Advocate: “If the price is too high, don’t buy the phone. The consumer has the control but refuses to recognize it. Apple is probably upset the price of their latest phone wasn’t higher, as the sheep stand in line and buy no matter what.”

What’s Your Upgrade Worth?

Posted on September 10, 2014 by - Uncategorized

When the latest version of something comes out, most people want it. It doesn’t matter if it’s a new brake pad or the latest smartphone, the desire exists. But in terms of technology, there seems to be a new model unveiled every other month.

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Take Apple products, for example. Yesterday was the release of the iPhone6, and as a result, everyone with an iPhone now has an outdated device. Now, consumers are having to decide how much they really care about owning the next new thing, and if it’s really worth shelling out all of those bucks.

Without a contract, the iPhone6 starts around $649. That’s a mortgage payment for a lot of people. If you are due for an upgrade from your carrier, then you might be in luck. If you have the patience (and if your phone lasts for two years) to play the upgrade game, you can stay relatively on par with the latest releases.

But the profit margins aren’t slowing down. So consumers should expect new releases all the time. The big question is, then, how much are you willing to pay for the upgrade? At what point do we, as consumers, ask for a break? Can they at least keep the charges the same? Nope, because the difference, in Apple’s case, between 900 billion in profit and 899 billion in profit makes all the difference.

In the future, maybe tech producers will make a device that will last longer than one year with the ability to update the software, not completely overhaul the hardware.