iPhone Pricing Strategy: A Financial Analysis of Apple's Potential Price Increase
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Exercise 3 – Analyzing the Financial Impact of Price and Volume Changes on Apple iPhones
Apple iPhone Sales and Manufacturing Costs
In 2014, Apple sold approximately 150,000,000 iPhones at a price of $640 per unit. The company's average manufacturing cost per iPhone is detailed in Table 1.
| Component | Cost (USD) |
|---|---|
| Flash Memory & RAM | 20.85 |
| Display & Touchscreen | 44.00 |
| Processor | 17.50 |
| Sensors | 6.50 |
| Cameras | 18.00 |
| Cellular Radio | 34.00 |
| Wireless Radio | 5.00 |
| Battery | 4.50 |
| Power Management | 8.50 |
| Mechanical Parts | 33.00 |
| Packaging | 7.00 |
| Production | 8.00 |
| Licensing Fees | 20.00 |
| Source: http://www.digitaltrends.com/mobile/iphone-cost-what-apple-is-paying/ | |
Table 2 outlines Apple's fixed costs associated with its iPhone business.