Who pays $1800 for an iPhone XS MAX? Why do new iPhones keep getting more EXPENSIVE?

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I feel a little burnt. Stayed up until 1 this morning to pre-order the new iPhone’s and Apple Watch’s, couldn’t fall asleep for another hour and was woken up by my kid two hours later.

That’s how I feel now BUT I’m still not sure how I feel about dropping almost 4 thousand dollars on two new iPhone’s and an Apple Watch’s. 4 grand.

After ordering the devices, I had to ask myself: Is Apple HOSING us with new iPhone prices? This was a question I’ve always had in the back of my mind AND after blowing everything in my account on new devices, coupled with the boring updates to the iPhone XS, I decided it was time for me to find an answer to: Is Apple HOSING us with with their pricing?

So is Apple just wringing their consumer base dry year after year? At $1100 dollars, the iPhone XS Max is the worlds most expensive iPhone.

Now as much as I want to get my pitchfork out and light a torch, I can’t. Because I don’t think Apple is hosing us with these iPhone prices. They’re expensive BUT from what I can gather, the prices seem reasonable based on how Apple’s priced their devices previously.

To come to this conclusion, I had to pour a litre of coffee down my gullet after my awful night of sleeping, wait for my bloodshot eyes to go away before sitting in front of my computer to do a bunch nerdy stuff. I do have to warn you, I had to make a lot of graphs for this video.

So here’s what Apple wanted us to pay for every iPhone since 2007. Remember when the iPhone first came out, how appalled everybody was at the $500 dollar price? And that wasn’t even the full price since it was partially subsidized by AT&T.

Now before doing anything else, I went and eliminate the outliers in the chart which were the iPhone 5C and SE. For now anyways and spoiler, the 5C and SE are going to have a big part to play when we compare it with the iPhone XR.

Let’s take into account the inflation as a dollar back in 2007 is not the same as the dollar in 2018. That’s a little more reasonable but the general trend still shows a big price increase over the last few years.

Now Apple doesn’t pocket the entire price of the iPhone as Apple does have to pay for manufacturing costs and component costs.
Notice that the base cost of the iPhone has also increased over the years, which doesn’t sound crazy since there’s more hardware that seems to get added into the device.

Now the margin, which is the difference between fixed cost of the hardware and the price we pay is the left over blue section on the graph.

If we plot that out as a percentage, it generally stays consistent over the years, sitting around the mid-60%’s. Now there is a BIG caveat with this because this is just hardware, I have no idea how to bake in the overhead costs since I don’t know them. If I was to do a bit more theory-crafting, Apple tries to maintain a margin of 40% across all of their products and services so my best guess is that out of $1000 iPhone, 30% goes to parts and 30% goes to overhead. My best guess.

BUT I have shown that Apple hasn’t been going out of their way to gouge us with the prices of the iPhone. They keep adding new hardware features that require more parts and that’s what drives the prices up.

That 30% to 60% margin seems like a LARGE number and some of us might think “Maybe Apple could stop being so greedy about it” BUT why would they? They have a product that nobody else can match so they’re going to charge an arm and leg for it. That’s business.

So has Apple been hosing us on the price of the new iPhone’s? Not really. BUT this still doesn’t make me feel any better dropping 4 grand on new tech ESPECIALLY when the iPhone XS is just so lacklustre in terms of features. When new iPhone’s were consistently under $1000 dollars, I felt that I could spend that even though I didn’t really need them but now that I’m paying close to $1500 dollars, it’s a different story.

At the end of the day, as consumers, we need to think long and hard about what these new devices can offer over slightly older ones. Because honestly, gun to my head, if I had to choose to spend $1800 dollars on an iPhone OR a laptop, I’d go with the laptop. If I had to choose between paying $1800 dollars for an iPhone or an iMac, I’d go with the iMac.

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38 Comments

  1. My question that I would love to ask Apple is this:
    Why, instead of spending so much in R/D to make the XR, why not just offer us consumers the X at a discounted price. That always have discounted last years models, and did with the 8. And it would probably end up being about the price of the XR But they just axed the X completely, and it wasn’t even out a full year…
    Now yes, the XR does have the new A12 chip. But the A11 is still an absolute beast and not lacking in power by any means. And also the X had a much better screen, dual cameras with real zoom, 3D Touch, and the better build quality of the stainless steel. So the X is better than the XR in almost every way..
    (And honestly, the resolution of the XR display is really a let down. Even the 6 plus had more resolution…)
    So why take away a better product at that price point, and spend a ton in R/D to offer us an inferior device??
    For a tiny bit faster chip, and stereo microphone?
    I’m sure that is well and good (the stereo recording is great but others have been doing this for years) but for my money I would have taken the X over the XR any day

  2. One thing that is definitely being forgotten here is that the United States just passed 25% tariffs on Chinese imports causing a massive price spike for the current models.

    The spike was so bad that Ford discontinued their car imports from China and cancelled the 2019 line of Ford sedans and coupes.

    However yes they are hosing you lol.

  3. lets say it cost apple $400 to $600 to make iphone XS MAX and then they sell it to the apple iSheep costumers for $1500 to $1999.00 apple so Greedy and smart thats how you get filthy rich and then they hide off shore countries all the stockpiles of $$$$$$ so they don't have to pay big taxes to the american or canadian governments LOL life is so good for Greedy Apple they can price gouging the apple costumers all they want in 2018 with the new iphones X's max oh and don't forget apple got caught red handed slowing down or shutting down your older iphones and ipads so you go out to store and buy new ones and get price gouge in 2018 LOL

  4. Needs graphs to justify $4k of tech that he admits is lackluster. No one is holding a gun to your head to buy this crap, if you find the cost ridiculous, buy something else.

  5. You have to be out of your mind. Samsung doesn't have a product that can match the iPhone? That's your opinion, but you couldn't be more wrong. Objectively speaking, both manufacturers produce excellent phones, spec wise, feature wise, and with regards to design. The only difference is Samsung does not excel at the mass brainwashing marketing machine that fills the gap between Apple's outrageous prices and its gullible customers.

    Apple makes 20% of all smartphones, yet rakes in 80% of profits of the ENTIRE industry. Users are paying far in excess of the value the phone actually provides. This is why I am not an Apple fan. They exploit their customers by providing a non-extraordinary product at massively extraordinary prices. By buying an iPhone you are spending a large sum of money on just the brand, which is a synthetic image crafted by the Apple's marketing machine.

    The image and brand do not make a superior phone. They just trick you into thinking that what you're buying is worth more than what it actually is.

  6. Bro, those t(ranny)-rap high hats in the background are annoying as fuck, especially around 5:45 mark, why not use music for human beings next time?

  7. I bought a Note 9, and while trying to sell my 7 months old Note 8, I realized Android depreciation are ridiculous, my iPhone 7 was selling at the same price as the Note 8. So as a smart consumer, I bought an iPhone Max and returned the Note 9.

  8. dood, you earned my subscription just for going to work on the statistics on 2.5 hours of sleep to show us informative content. good stuff man

  9. Pre Apple-event, I was half thinking of upgrading my 8 Plus to X Plus (Xs Max). Post event, I was still leaning towards the 'maybe' box. That ‘maybe’ became a definitive 'no' when Apple released their pricing options. OMG, a little under AUD$2900 when bundling leather case, screen protector and apple care with 512gb model. Criminal. On eBay, I can buy 7 Plus, 13” Air and Apple Watch 3 for the same money. Furthermore, handled Xs Max last week and found it to be more a ‘two-hand’ device, even though similar dimensions to 8 Plus. Must say, beautiful screen. Just wow. So crisp. OK, time to consider the Xr. Seems like acceptable compromise. Again, shocked by pricing. Close to AUD$1800 – with extras – for 256gb model. I picked up my (2nd hand but unused) 8 Plus on eBay for AUD$1000. On face value, Xr appears to be great phone, however I can’t justify $800-900 for upgrade. Also, with the Xr release, you can find 256gb 8 Plus's on eBay for around $900. It’s still a great phone – bezels or not. With iOS12 installed combined with dual cameras and fingerprint reader; will keep another year. However, the Apple Watch 4 is another story. Great upgrade, even as AW3 owner. Ordered one.

  10. Unmatched technology?????? You can get better phone for less than half in android device… Sorry mate, but this is something I can't accept. Go get some sleep. ?

  11. Stop buying expensive iPhone ……they will automatically bring the prices down .As long customer agree to pay meaningless pricing for iPhone they will continue to dominate more .

  12. so why does other companies dont charge that much on a similar product? LOL come on man they pocket almost the entire 1100 that is how they become a trillion $ company