The difference between how much an iPhone costs to make – and how much Apple sells it for

Apple has a margin of more than £400 per phone, according to data

Harriet Agerholm
Sunday 25 September 2016 16:47
The Apple iPhone 7 costs £113 more in the UK than America, thanks to Brexit
The Apple iPhone 7 costs £113 more in the UK than America, thanks to Brexit

An iPhone 7 costs Apple £174 to make – £425 less than what most UK customers must pay for it, according to analysts.

The total price of components in a 32GB iPhone 7 come to $220 (£170), while the cost of manufacturing the handset is $5 (£4), according to IHS Markit.

An iPhone 7 in the UK costs £599 – which gives Apple a healthy margin of £425 – but this phone actually costs Apple more to make than their previous model, the iPhone 6S.

“Costs for the iPhone 7 are more in line with what we have seen in teardowns of recent flagship phones from Apple’s main competitor, Samsung, in that the costs are higher than in previous iPhone teardown analyses,” Andrew Rassweiler, senior director of cost benchmarking for IHS Markit, said in a statement.

“Apple still makes more margin from hardware than Samsung, but materials costs are higher than in the past.”

The “teardown price” does not take into account the cost of research and transport. Apple’s chief executive Tim Cook has previously disputed estimates made by IHS.

"Generally, cost breakdowns that come out around our products [...] are much different than the reality. I've never seen one that is anywhere close to being accurate," Mr Cook said last year.

In the UK, an iPhone 7 costs £60 more than the iPhone 6S, but in the US the price for the new model is the same as the last one.

Currency fluctuations after the Brexit vote have been cited as a major reason for the price rise in the UK, with the new Apple phone costing £113 more in the UK than in the US.

The iPhone 7 is the first handset the company has made since it’s phone sales stopped growing. The new model boasts improved battery life and a better camera.

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