Apple iPhone 6 and 6 Plus are certainly among the most expensive smartphones in the market but a cost breakdown report by IHS shows the actual cost of making each handset ranges between $200 and $270.
Apple, the second largest smartphone maker in the world, is well-known for its premium handsets that sell for top dollar in the market. The company's latest entries, the iPhone 6 and iPhone 6 Plus, are by far the most expensive handsets that outbid most of the premium flagship smartphones from other renowned brands. The research firm IHS revealed the actual manufacturing costs in a recent report.
The cost analysis was exclusively shared with Re/Code ahead of its public release, which shows each iPhone 6 costs somewhere between $200 and $247. The analysis report does not include some of the key expenditures such as advertising, marketing and distribution, which is largely managed by Apple. But the pricing gives the approximate net worth of the handset based on the material used in it.
According to the report, Apple spends $200 for the base model of iPhone 6 and up to $247 for the 128 GB high-end version. The research firm has also included an estimate of the labor cost involved, which is expected to be $4 to $4.50 for each device. The bigger 5.5-inch iPhone 6 Plus costs slightly higher at $216 for the entry-level model and $263 for the high-end piece.
Apple enjoys steep profits based on this analysis, as the iPhone 6 starts at $649 and goes up to $849 for the higher end model. The tech giant offers three storage options, 16GB, 64GB and 128GB for both of its iPhone 6 and iPhone 6 Plus, with the 128GB model deemed as the high-end device. The iPhone 6 Plus sells for $749 for the 16GB version and $949 for the high-end model. These prices are for the unlocked, off-contract smartphones.
Based on this, Apple scores a 69 percent profit margin, which is similar to the profits gained with iPhone 5 and iPhone 5S. The Cupertino tech giant had a 55 percent margin when it set out in the market with its first iPhone in 2007.
IHS found that the iPhone 6 and 6 Plus display make up most of the device's cost. The iPhone 6's screen costs $45 while Apple spends $52.50 on the iPhone 6 Plus' screen, the report added. Apple also makes additional profit in higher storage models. Apple spends about $47 for upgrading storage options from 16GB to 128GB and the company charges $100 to $200, which gives an additional one percent profit margin on the 128GB iPhone 6 and 6 Plus smartphones.
Comparatively, Apple's biggest rival, Samsung makes a profit margin of about 58 percent with its flagship Galaxy S5 model. The 32GB variant of the S5 costs $251.52 while Samsung sells it for $599.
