The answer is $260. That is how much it costs Apple to manufacture an iPad device. That also means that Apple makes at least $240 every time someone has purchased an iPad — this is interesting to note, because it reveals that the iPad could have been priced even cheaper. Much cheaper.
Apple still would have made a nice chunk of change, either way.
However, we know that Apple marks up their products because they are considered “luxury” items, but it doesn’t seem quite right considering how much Apple claimed that they wanted everyone to own one of these things.
After all, Apple is making a killing from the iTunes store, so why not give the hardware away and reap the rewards from software sales? That makes sense from a business and consumer perspective — everyone benefits.
Regardless, with Apple making around around a 200-percent return on investment, you better believe that Apple has plenty of room to drop the price — a $50 to $100 price drop with the second-generation iPad should be a shock to no one.
Yet, it just proves that Apple really doesn’t care if everyone owns an iPad, because they are still stuck in their thinking that they must charge high prices for their hardware, and that could hurt the company in the long term.
[via ComputerWorld]
Why to you even harp on the profit margin that apple makes? Everyone knows they’re expensive. Everyone knows that all apple products could be cheaper. and Everyone knows that a 100% markup from cost is NOT a bad sales idea, especially if the company in question is KNOWN for having multiple generations of one product. It makes it that much easier and economical for the company to price drop the earlier generation and still be able to create profit from it. So I say this as respectfully as I can, go get your own computer company and run beside apple. Then tell me what you want the profit margins to be.
And by “everyone” having an ipad, we all know that the “everyone” Steve Jobs refers to is everyone that wants one can save up there little duckies and get one. it’s not a multi-million dollar device. And It still costs half as much as most PC tablets.
Obviously just another Apple hater and can’t find anything to diss intelligently so he picks on something totally irrelevant. If you want to think about profit margins, what do you think the margins are on a copy of Windows? How much is fair?
I’m sure Apple’s development costs are much greater than Microsoft’s. How much effort was invested in a POS like Vista?
Maybe Apple recoups their initial costs from the first release then can lower the price on later models where the big bucks have already been recouped?
If this guy knows so much about business, why isn’t he running his own company instead of whining about someone else;s?
You are ignorant. Apple, just like every company in the world, sets their prices for maximum profit. Apple’s accountants obviously determined that Apple would make the most money by setting the iPad at its current price. Anybody with a 5th grade education should understand this concept. This is how business works. And it looks like Apple hit the price point just right seeing the way iPads are flying off the shelves.
Here is the big picture.. why Apple products are so darn expensive….. http://bit.ly/bK9ywO 🙂
How did you determine the price Apple pays for the iPad? Why should Apple charge 1 cent less if people are willing to pay for it? And this pricing structure will hurt Apple in the long run? They seem to know what they’ve been doing the last 20 years.