And as a socialist, this means I have to kill everyone in the whole earth.
Before manufacturing, advertising, freight and other charges, this represents a 52% gross margin based on the 30GB iPod's $299 suggested retail price.
So the costs are actually higher, if you take production into account. Nonetheless, Apple is making a killing. And is anyone surprised?
ummm...the markup on most retail goods is 100%...half of what you pay for almost anything is profit...
A business making profit off of goods in a capitalist economy!? Say it ain't so!!!
Yay for profit. If Apple did not make profits it would not make iPods, or Macs or anything.
Making profits makes electronics cheaper each year. Soviet high-tech ventures were never very dynamic.
And this is news how? It's not like it's 50% profit on food and water. It's a luxury iPod. Here is another little "dirty secret", there is a 50% mark up on baseball hats and football jerseys when you buy them at the mall....SHOCKING!!!
ZZZZZZZZZzzzzzzzzz....
Um, and?
Not to mention, don't forget about advertising. You know those prime time TV commercials that have all of us drooling for a Nano? Those don't come exactly cheap.
However, what this REALLY speaks to is how close things are to sparking off a price war. iPods and their kin have so far avoided one because they're all seen as "luxury goods" and therefore expected to come at a premium. But one day, very soon, some manufacturer is going to look at this article and realize that they could put out an iPod clone for half the price Apple or Creative charges.
What it really takes is a change in public consciousness, and Apple is helping to do this by becoming more populist. People are close to saying they "deserve" iPods, rather than seeing them as toys for rich people. When that happens, demand will go up and the prices will come down.
Capitalist pigs!!!
"Master of the 'teardown', Eric Pratt from iSuppli Corp. specializes in stripping down gadgets and finding out how much they're really worth. Eric brought three of our favorite gadgets to dissect: the Mac mini, the iPod Nano and the Game Boy Micro.
The Mac mini which retails for $499 is actually worth $283 in parts and labor.
The 2 Gig iPod Nano retails for $199, but is actually worth $103 in parts and labor. The most expensive component is actually the iPod Nano's 2 Gigs of memory.
Eric finished up with a G4 exclusive teardown of the Game Boy Micro which retails for $100. The actual cost of the Micro is only $44. The screen on the GB Micro is actually the most expensive component."
(via)
Where I worked in retail, 50% profit was not only normal, it was low... clothing averages about 75% profit.
Fraise, it's not that I doubt your figures, but I wonder what your position in retail was. There is a tremendous difference between a 50-75% markup and a 50-75% profit. Most retail operates on less than 10% margins when you subtract all of the fixed & variable costs out of it. Grocery stores operate on around a 2-4% profit margin on the foodstuffs. They make additional monies through selling space allotments (which is what gives Coke & Pepsi domination over any wannabes).
Some of y'all ought to try running a business before declaring what IS and what AIN'T "pure" profit.
Laughable.
Chy, if this surprises you, I strongly suggest you never attempt to sell books to a used bookstore.
This is the stupidest fucking thing I've ever seen.
Wait a minute...just because a link isn't very interesting is no reason to be a dink about it.
Sorry, sorry, as you were :)
People, people, people.. see any editorialising in my original comment?
You fucking capitalist pigs! You'll be first up against the wall when the revolution comes, and don't expect any help from me!
I'll take my chances.
Moneyjane: Want to tell Chyren about Income, less depreciation, advertising expenses, maintenance expenses, and all the rest, and how that equals Profit?
and don't expect any help from me!
Apparently Chyren will miss the revolution while obsessively listening to a sexy black Nano. And not just black, but anarchist black. Get this right, right now: The revolution will be podcasted.
No, no, no, I'm an anarcho-syndicalist. We enjoy music by rubbing two bits of revolutionary sandpaper together and listening closely. But voting on who gets to rub the sandpaper takes two weeks.
Holy crap! Apple's taking half of what we pay them and sticking it in the bank! That's highway robbe—
Before manufacturing, advertising, freight and other charges, this represents a 52% gross margin based on the 30GB iPod's $299 suggested retail price.
Did you know that the actual cost of an average hardcover book, taking into account only the raw materials, is about $3-4? And yet most books are hard-pressed to make their money back, despite a much higher retail price. But I thought 80% of the book's retail price was profit!
Not that Apple isn't raking it in, but the "raw materials" argument has always been a false one. Without those advertising campaigns, you'd never know about iPods; without those freight costs, those iPods would never be assembled, let alone get to your doorstep; without the product R&D that goes into perfecting the UI everyone loves so much and the white plastic lozenge everyone drools over, the iPod wouldn't even exist except as a box of bits. The investors who read the iPod dissection report understand this. The people acting shocked, shocked, that the iPod's parts are worth far less than retail price, apparently don't.
See how well the filthy capitalists brainwash them in North America Comrade? The sad spectacle of the proletarians defending the system that robs them! Oh the false conciousness!
Here in the commune we only listen to live music performed by strolling bands of guerilla mariachi.
If this is so outrageous, how come you don't see other companies manufacturing better quality mp3 players with higher storage for less money?
Or do you?
I'm kinda clueless about the mp3 player market
This reminds me of an old joke the hardware engineers used to tell back when I was working on flight simulators for the Air Force. Story goes that there was this old guy working on the hardware service team for Evans and Sutherland, a real guru. One Saturday the customer called him and asked him to come fix their image generator because they knew he was the only guy who could do it. "Name your price," they said. "Fifty thousand dollars," he said. "Fine," they said.
So he drove out and fixed the computer, and presented them with a bill for $50,000.
A couple of weeks later, the customer's accounts-payable department calls the guy and says that they can't pay the bill because it wasn't itemized. "No problem," he says, and he promptly sends them a new, itemized bill. It reads as follows:
1. Replacing one transistor: $1.00
2. Knowing which one to replace: $49,999.00
Judging a company's profit margin by calculating only the cost of goods sold is about the dumbest thing I've ever heard in my entire life. It's like estimating a restaurant's profits based solely on the wholesale price of the lettuce in your salad. This guy seems to be blissfully unencumbered by an understanding of basic business concepts. Or hell, even basic economic concepts.
(And for the record, by "this guy" I'm not referring to the analyst. I'm referring to Mister "I don't believe it unless I've seen it on the Daily Kos" over there who seems to think that the words "pure profit" are a synonym for "sale price less cost of materials," a figure which wouldn't even be equal to the gross margin until you take into account the costs of manufacturing. Sheesh.)
as has been hinted at already, its all about the marketing and advertising... which, i would guess, account for a very sizable chunk of the ipod's total net cost to produce/distribute/sell. this doesnt negate chyren's main claim that ipods are (still) laughably overpriced, but rather quite the opposite imho.
nonetheless, they are banking on the fact that should consumers require "itunes" for their "ipods", apple is coincidently making available for purchase various "itunes" from their convenient website. that way, consumers will be hooked for life (or, the life of the product). see also: Razor and blades business model.
I sense a disconnect in epistemologies between and understanding of surplus-value and the capitalist concept of profit. Or something.
its all about the marketing and advertising
Surely the quality of the product has something to do with it, no?
To expand a bit, Wedge argues that the iPod is "laughably overpriced." He wants to argue that Apple's good marketing is responsible for the iPod's success; this ignores the possibility that the iPod itself might be responsible for that success. The reason, then, that Apple is sitting on top of the market is not solely because of clever marketing, but because the iPod is the best mp3 player available (and I think it is). If the iPod really was overpriced, we'd see a bunch of solid competitors at lower prices. We don't. The iPod, for many, many people is worth the price.
So I bought one - and then I sold it to some SUCKA for half-price! Suddenly all that "PROPHET" disappeared like a puff of bullshit.
So, take that "Steve Jobs" - where's your fucking profit now, bitch? HA HA HA - PWNED!
OH! The ipod is 1/2 pure PROPHET! Well, that does explain the weird "Two Kings Shall Kneel Before The Sodomized Horse and Sing The Praises of Pope q" track that keeps appearing in my playlists.
Nickdanger with the assist . . aaand . . SCORE!!!
I never once claimed that it was "overpriced", I simply linked to an investment bank analyst's breakdown of the device with the statement that half of the price is pure profit, which is true. The rest of the Apple worshippers knee-jerked into emotionalism. I merely reported, did not editorialise. If you took my faux socialist comments seriously, that would be silly. I believe this was also featured on tech tv last nite, but not sure. Twits.
Chyren - surely a large portion of the "profit" is used to cover indirect costs like accounting, building maintenance, sales and marketing, engineering and design, executive salaries, taxes, insurance, and on, ond on (as opposed to parts and labor to build the thing.) Price less cost to manufacture is generally called "margin" in the US. "Profit" is net of a raft of other costs.
I didn't say it wasn't.
Then why is it "true" then that half the price is "pure profit" the write up in the link says they were calculating gross margin, not profit?
she's run rings around you logically.
BURMA
Half the money you pay for an iPod is pure PROFIT.
I'd say all of the money you pay for an iPod is pure profit, since it's likely from your disposable income, and thus the difference between your earned income and the cost of your basic living expenses.
Capitalist bastard.
WTF is it Make Chyren Cry Day or something?
Cause I can totally get behind that.
YOU GONNA CRY NOW LITTLE BABY CHYREN? HUH ARE YOU LITTLE BABY WAH-WAH CHYREN'S POST HASN'T SHOWN THE MONKEYS THE WAY TO SOCIALIST UTOPIA AFTERALL?! WAAH WAAH I WANT MY MOMMY WAAAAAAH!
WAAAAAAAH!
Oi, 'ees made 'imself cry nah.
I wasn't calling Chyren a capitalist bastard. That was directed toward anyone who would spend their money on an iPod instead of contributing it to the collective good of all mankind.
I like how everyone takes the advertising, transport and all that shit in stride.
Think about Jamaican bananas monkeys!
Oh, I forgot to add: You capitalist swine.
I just ate too much Peking Pork. Does that make me a Red Loving Capitalist Pig?
Say, speaking of capitalist pigs and like animals, where do you think I can get a pack of imperialist running dogs? I'm entering the Iditorad you see, and I need a team for my sled...
This is the stupidest fucking thing I've ever seen.Wait a minute...just because a link isn't very interesting is no reason to be a dink about it. Sorry, sorry, as you were :)