Apple:The Major Markup

Picture Courtesy Apple

People today almost always have smartphones, and a large majority of people with smartphones have Apple iPhones. Apple recently came out with the iPhone 6, coming in at a suggested retail price of $649. Of course, most people don't pay the full $649 here in the United States because of carrier plans and more, but there are places and people who pay $649 per iPhone.

So how much does the iPhone 6 cost?

$200.10

The standard 16GB iPhone 6 costs Apple about$200.10 according to multiple sites such as CNN, Forbes, Time Magazine, and more. So think about that, people are paying in some cases a 324% markup to Apple, when they're buying the iPhone 6. The most expensive part that you're paying for is the touchscreen at $45. Talk about great margins...

Here is the link that CNN Money posted around release time about their exact costs.

How does Apple do this?

Supply Chain and Logistics

While Apple is highly known for their technology (and for obvious reasons) most people don't see the thing they arguably do best, managing their Supply Chain. They are able to have better than average operations while having margins on their product like the iPhone 6 we talked about earlier. They purchase items from all over the world, and are able to find the cheapest products they can while maintaining quality. According to this article, Apple makes sure that all of their suppliers will agree to meet their production standards. Buying in bulk is one method that any company can use to lower prices, as long as their supplier has the manufacturing output necessary. 

One of the things that Apple also saves money on is their manufacturing/sourcing locations. This could be an ethics topic, but the main focus point here is that the vast majority of their supplier locations are outside the US. If you're interested in seeing more of the manufacturing locations this website has some interesting data. 

I hope this was able to give you some insight as to how important Supply Chain and Purchasing is for all companies.

Thanks for reading!

Andrew