Feeling Ripped Off? ... You Should!

[art]

iPhone could deliver a profit margin of more than 55 percent

after hardware and manufacturing costs, In comparison, iSuppli said,

Average gross profit margins range from 20 percent to 30 percent

for advanced phones from cell phone rivals such as Nokia, Motorola Inc. and Samsung Electronics Co Ltd.

Try blaming that on AT&T.

source:
http://www.foxnews.com/story/0,2933,287901,00.html

[DRabbit]

and what's your point?

I don't feel ripped off... Just because the PARTS may cost a certain amount that doesn't account for the years of research and development, the marketing, the new tech support employees, etc. that have been required for Apple to bring us this device.

Not to mention, companies are ALLOWED to make a profit off the items they sell. Were you aware that a CD only costs anywhere from like $.25 to $1.00 to manufacture and package? Or how about a DVD?... like $.50 to $1.50. I bet you pay a lot more than that at the store.

Get a life.

[noahlh]

If we're paying for it, then Apple deserves to earn the profit. Nobody forced anyone to spend $600 on a phone...

[jbaraga]

But how many other mobile devices have been marketed as heavily as the iPhone? I saw that article before, and IIRC it only takes into account the fixed costs for manufacturing the device itself. There's a lot more to it than that.

[Platinum]

Everything you buy in the world has a profit margin. A pair of Nike shoes costs about $2 to make in some foreign country and sells for $100+ normally.

You forget that Apple spent over 3 years developing the iPhone and spent a ton of money on Research and Dev costs.

[robhon]

Yeah, and you're totally missing so many other aspects of the pricing question.

1) Products are not priced on margins. They are priced on VALUE to the customer. If something has a higher value it has a higher price irrespective of the costs.

2) Apple very obviously put HUGE money into the development of this product. They are still very long from seeing any ROI for the iPhone. They'll get it but they got some development costs to recoup out of this thing. Probably FAR more than any other mobile phone that's ever been put on the market before.

If the price of the iPhone bothers you, go buy Apple stock! Then you get the best of both. You get a great product, and then when the stock price goes up because they did such an incredible job, you win there too! Buy $600 of AAPL and I bet you'll pay for your iPhone before the term of your ATT contract is up.

[robhon]

Everything you buy in the world has a profit margin. A pair of Nike shoes costs about $2 to make in some foreign country and sells for $100+ normally.

You forget that Apple spent over 3 years developing the iPhone and spent a ton of money on Research and Dev costs.

Actually NIKE shoes cost a little more than that but not a ton more. (I've been to their factories.)

[seabreeze]

iPhone could deliver a profit margin of more than 55 percent

after hardware and manufacturing costs, In comparison, iSuppli said,

Average gross profit margins range from 20 percent to 30 percent

for advanced phones from cell phone rivals such as Nokia, Motorola Inc. and Samsung Electronics Co Ltd.

Try blaming that on AT&T.

source:
http://www.foxnews.com/story/0,2933,287901,00.html


Sorry I don't feel ripped off either...... I actually returned my i-phone as it had a volume issue, and as soon as they fix the initial bugs I will go straight and buy one. I don't think it's expensive as the R&D onn this phone must have cost them a bundle! Also if you lived in Europe and the rest of the world, you would realize that phones are only subsidized in the US!!! Everywhere else they cost a fortune. My last phone cost me $883 it was an i-mate that ran windows and was junk!!! I gave it away after two months of use......So again, I don't think I have been ripped off at all!!!! Show me anything out there that comes close to the i-phone? Even with the volume issue it had, I only returned it because I did not want to get stuck with a 2 year phone contract unless the phone features worked perfectly.....

[bcaslis]

Why do threads like this start off trying to provoke something? There is no set amount of markup that is "fair". It's only a rip-off if Apple didn't deliver the promised functionality. I think they have and they deserve their price. If you don't like it, don't buy it.

What you think the "markup" is on software? A lot, and there's alot of great software in the iPhone.

[Marksman]

Yeah but all those other cell phoens suck. Maybe if they made more profit they would have more money to spend on R&D and they could make some decent software.

I don't feel ripped off at all.

I like how people throw around these figures without any understanding what they mean.

Maybe if the other guys made better phones they could make a higher gross margin too.

[robhon]

Another thing to note is that they are talking about "Gross Margin." That is selling price minus manufacturing, shipping, etc. Out of that 55% GM Apple has to market, distribute, sell, fix, return, continue to develop, pay insurance, legal, accounting, management, ad nauseum...

The amount of money Steve puts in his pocket is still $1/year. I think he's banking on the stock going up. :wink:

[hutchensgd]

You certainly would not be too pleased with the profit margins that my company makes on it's products either. And silly me, I thought making as much money possible was the whole idea of business.




Yeah, and you're totally missing so many other aspects of the pricing question.

1) Products are not priced on margins. They are priced on VALUE to the customer. If something has a higher value it has a higher price irrespective of the costs.

2) Apple very obviously put HUGE money into the development of this product. They are still very long from seeing any ROI for the iPhone. They'll get it but they got some development costs to recoup out of this thing. Probably FAR more than any other mobile phone that's ever been put on the market before.

If the price of the iPhone bothers you, go buy Apple stock! Then you get the best of both. You get a great product, and then when the stock price goes up because they did such an incredible job, you win there too! Buy $600 of AAPL and I bet you'll pay for your iPhone before the term of your ATT contract is up.

[Marksman]

You certainly would not be too pleased with the profit margins that my company makes on it's products either. And silly me, I thought making as much money possible was the whole idea of business.

It amuses me to no end that the same people that run around and claim the iPhone is a toy and can't be used for business don't know the first thing about business. It is weird.

[hutchensgd]

About 50% of the people in line last Friday were business people who understood the power that this new tool provided. I have not been let down at all. Not even a minor concern!


It amuses me to no end that the same people that run around and claim the iPhone is a toy and can't be used for business don't know the first thing about business. It is weird.

[Marksman]

About 50% of the people in line last Friday were business people who understood the power that this new tool provided. I have not been let down at all. Not even a minor concern!

Yeah I met a lot of nice people in line as well. And most of the ones I talked with had their own businesses or planned to use their iPhones as part of their work.

[robhon]

You certainly would not be too pleased with the profit margins that my company makes on it's products either. And silly me, I thought making as much money possible was the whole idea of business.

Absolutely. The whole point of being in business is to make money creating products that are valuable to customers. Price too high you have no customers. Price too low and you make no money. The name of the game is to find that magic place in the middle where you make the most money creating the most value for customers. I think Apple did their homework very well and price at the right spot.

[Zachary Vex]

The profit incentive is the only reason we even HAVE fun technological toys to play with. If profit was made illegal, what would we do? Stay in bed? Well, actually, maybe that wouldn't be such a bad thing...

[applefreak]

R&D ROI. Nuff said.

[Lazarus]

the point is "PRINCIPALS" just got we are stupid enough to pay $600, shouldn't give them the right to charge us that. plus they shouldn't even be able to call these 8 & 4GB if the OS alone almost takes up 1 of those GB. I feel your frustration but where were you when I asked everyone to boy-cot this thing lol

[hutchensgd]

To your point, with 500,000 I-phones
sold @ $550, this is 1/4 Billion! Yes, I
would say they did well!




Absolutely. The whole point of being in business is to make money creating products that are valuable to customers. Price too high you have no customers. Price too low and you make no money. The name of the game is to find that magic place in the middle where you make the most money creating the most value for customers. I think Apple did their homework very well and price at the right spot.

[DD0]

Good thing you aren't in charge of anything to do with money. Yes Apple's profit margin is larger because they don't deal with a 3rd party. They manufacture an item and then they sell it directly to the consumer. They marked the phone up 50% from production, which is really low relatively. Most vendors don't sell directly to a consumer, making the mark up more and the profit less.

Let's not even begin to talk about marketing, research & design and everything else that comes with a product like this. Hooray for stupid people.

[Lazarus]

Absolutely. The whole point of being in business is to make money creating products that are valuable to customers. Price too high you have no customers. Price too low and you make no money. The name of the game is to find that magic place in the middle where you make the most money creating the most value for customers. I think Apple did their homework very well and price at the right spot.
dude sorry i gotta disagree with you on this one some what. I mean come on they could of easily just made an 8GB (only 12% 4GB were sold anyway) and charged $500 that would of been more reasonable don't ya think?

[mav]

Geez, now that the iPhone is released, this forum is full of nothing but complaining, whining and *****ing. Is anyone, besides me, actually happy with their iPhone?

[hutchensgd]

I just love mine. Worth all of the money I paid for it. I do not care that Apple made a 50% profit margin on it either!

Geez, now that the iPhone is released, this forum is full of nothing but complaining, whining and *****ing. Is anyone, besides me, actually happy with their iPhone?

[travelgirl]

I paid it willingly. I'm even thinking of sending Mr. Jobs a check for an extra $10. The convenience this iPhone gives me is immeasurable. I'm not tethered to my office any more and I can still respond to clients very quickly.

You wanna see obscene profits margins -- ask a cruise ship what the profit is on the photographs they sell onboard. You'll barf.

[oembios]

I was ready to pay $1150 but got a deal at $600, I'm feeling guilty that Apple didn't make more. Is there a place to send them donations?

[hutchensgd]

I would not go that far, but I feel the value @ 600 was clearly there.

I was ready to pay $1150 but got a deal at $600, I'm feeling guilty that Apple didn't make more. Is there a place to send them donations?

[Knowsall]

I see the $600 value everytime I look at it. End thread

[mlass]

Did you fell ripped off when you bought the first TV, VCR, Big Screen, Telephone, Cell Phone, Internet Access (dial up), Cable TV, Satelite TV, Car, and so on. I can go on for days, but will never fell ripped off. I support the cost of development. It took three years to develop the iPhone. I can tell you the profit margin for me to work on your car at $85 an hour is good too and I don't see people complaining about that.

People that complain can't afford new Technology and have no clue what is involved to create it.

For those that want to disagree, tell me what new thing you invented that this cool and offering so cheap I can't refuse to buy it.

Send from my iPhone.

Sorry for the spelling

[hutchensgd]

I am sensing a logic issue. You are suggesting to place more expensive chip in each and every phone then lower the price for all of them? Maybe this is another example of how to make up for the lower profit margin in higher volume theory. There is only one key issue, the majority of phones sold were 8GB, in addition, this is what Apple projected all along.


dude sorry i gotta disagree with you on this one some what. I mean come on they could of easily just made an 8GB (only 12% 4GB were sold anyway) and charged $500 that would of been more reasonable don't ya think?

[Platinum]

Geez, now that the iPhone is released, this forum is full of nothing but complaining, whining and *****ing. Is anyone, besides me, actually happy with their iPhone?

I am very happy with mine, and I was happy paying $600 for it!

[Platinum]

dude sorry i gotta disagree with you on this one some what. I mean come on they could of easily just made an 8GB (only 12% 4GB were sold anyway) and charged $500 that would of been more reasonable don't ya think?

Apple knew that they wouldnt sell as many 4GB. My AT&T store received 30 of the 8GB phones and 10 of the 4GB, I dont think it was a suprise to anyone.

[mlass]

Geez, now that the iPhone is released, this forum is full of nothing but complaining, whining and *****ing. Is anyone, besides me, actually happy with their iPhone?

....and full of people that bash others for complaining.

[mlass]

Good point robhon, if you had bought just 7 shares of Apple 3 years ago that would have paid for the iPhone.

Now what kind of profit was that.

[FlyersPhanatic9]

art sorta just crawled into a hole
i was perfectly fine with paying 600 for mine :)

[oembios]

I would not go that far, but I feel the value @ 600 was clearly there.

I was just joking, since everyone agrees and creates various justifications for Apple to do whatever it wants and charge whatever it wants, wow, Apple has it made.

Dare to actually think and point out anything else and one gets attacked, and the post is twisted and used against the OP......:smile:

It's the only forum where one doesn't have to think (or spell correctly), just be a yes person.......Pretty cool....:smile:

[mrmacbook]

iPhone could deliver a profit margin of more than 55 percent

after hardware and manufacturing costs, In comparison, iSuppli said,

Average gross profit margins range from 20 percent to 30 percent

for advanced phones from cell phone rivals such as Nokia, Motorola Inc. and Samsung Electronics Co Ltd.

Try blaming that on AT&T.

source:
http://www.foxnews.com/story/0,2933,287901,00.html



All apple stuff is pricey due to the fact that they made the software / firmware that it runs on. Foxnews is total BS. iPhones are worth every penny.

[oembios]

I agree my iphone was a bargain. it works perfect.

[DD0]

Why there is 4 pages of responses to an article written by Fox News is beyond me. I might as well crap on a page and you guys can talk about that.

[GuyFawkes]

And what would Rupert Murdock's interest be in all of this? Seems to me that the most critical things coming out seem to come from entities that have a financial interest in themselves... And Apple is cutting into that financial interest.

Earlier we were hearing about how "MS"nbc has an article about how the love affair is over cause his iPhone died... Yet if you read his story Apple took great care of the guy and replaced his phone no worries. I would have been thrilled that my new expensive toy is being taken care of. Yet the title and tone of the article was "it's over"... Good god give me a break!

GuyFawkes

[SuperDave]

I hate to burst your bubble but most retail stores charge double or more than what they pay for a product. We did it in a hockey shop. I got a pair of $550 hockey skates for $230. I'm not surprised at all.

[wjp09]

I don't feel ripped off