With a plethora of smartphones available on the market, now we can easily get a good device from popular companies like Apple, Samsung, HTC or LG.
However, consumers always want to get the most out of their money. They want to know if the manufacturers are making a lot of profits from their products. Therefore, we investigate the production cost of the top-selling smartphones on the market and this could be an important suggestion for your decision.
The production cost is based on teardown of the devices, analysis of specs and information from suppliers. The most costly parts are often the core electronics, display, memory, and camera.
Let’s check out the list of smartphones with information about production cost (Bill of materials plus manufacturing cost), full retail price at launch and profit margin.
| Smartphone | Production Cost | Retail Price | Profit margin |
| Apple iPhone XS Max (256GB) | $443 | $1,249 | 64.53% |
| Apple iPhone X (64GB) | $389.50 | $999 | 61.01% |
| Apple iPhone 8 Plus (64GB) | $295.44 | $799 | 63.02% |
| Apple iPhone 8 (64GB) | $254.87 | $699 | 63.54% |
| Apple iPhone 7 Plus (32GB) | $277.66 | $769 | 63.9% |
| Apple iPhone 7 (32GB) | $224.80 | $649 | 65.4% |
| Apple iPhone 6S Plus (16GB) | $236 | $749 | 68.5% |
| Apple iPhone 6S Plus (64GB) | $253 | $849 | 70.2% |
| Apple iPhone 6S (16GB) | $211.50 | $649 | 67.4% |
| Apple iPhone 6 Plus (16GB) | $215.60 | $749 | 71.2% |
| Apple iPhone 6 Plus (128GB) | $263 | $949 | 72.4% |
| Apple iPhone 6 (16GB) | $200.10 | $649 | 69.2% |
| Apple iPhone 6 (128GB) | $247 | $849 | 70.9% |
| Apple iPhone 5C (16GB) | $183 | $549 | 67% |
| Apple iPhone 5S (16GB) | $199 | $649 | 69% |
| Apple iPhone 5S (64GB) | $218 | $849 | 74% |
| Apple iPhone 5 (16GB) | $207 | $649 | 68% |
| Apple iPhone 4 (16GB) | $188 | $599 | 69% |
| Apple iPhone 4S (16GB) | $188 | $599 | 69% |
| Google Pixel XL (32GB) | $285.75 | $769 | 62.84% |
| Samsung Galaxy Note 3 (32GB) | $232.50 | $699 | 69.6% |
| Samsung Galaxy Note 8 | $369 | $950 | 61.2% |
| Samsung Galaxy S3 (16GB) | $213 | $549 | 61% |
| Samsung Galaxy S4 (16GB HSPA+) | $244 | $579 | 58% |
| Samsung Galaxy S5 (32GB) | $256 | $569 | 55% |
| Samsung Galaxy S6 (32GB) | $275.50 | $699.99 | 60.6% |
| Samsung Galaxy S6 Edge (64GB) | $290.45 | $799.99 | 63.7% |
| Samsung Galaxy S7 (32GB) | $255 | $599 | 57.4% |
| Samsung Galaxy S8 (64GB) | $307.50 | $720 | 57.3% |
| Samsung Galaxy S8 Plus | $343 | $850 | 59.6% |
| Samsung Galaxy S9 Plus | $379 | $839 | 54.8% |
Notice that we don’t take into account other costs like marketing, research and development, distribution, staff, packaging, or software, so the manufacturers wouldn’t earn that much profit from their products.
The prices we listed above are the full prices at launch, most of them could have been adjusted after a few months or even weeks. We don’t use subsidized prices from carriers because you have to pay more during the contract. Therefore, make sure to double check the price before purchasing.
reader says
How do you calculete prfit margin? I think percent rates are wrong.
Just for fun says
No dude. They are perfect.
Market price – production cost= profit
Profit/ market price gives you profit margin.
Esteban says
Does that include marketing, distribution, shipping, etc?
Steve says
The article clearly states “Notice that we don’t take into account other costs like marketing, research and development, distribution, staff or packaging, so the manufacturers wouldn’t earn that much profit from their products.”
David M says
Eh, chiming in here for the sake of it. This article is not calculating profit margin’s accurately. Regardless of what “Notice’s” or other asterisk the author throws about the paragraph, that doesn’t all the sudden change how accounting principals work. The clearest note on this is the column, Production Cost. This is not production cost. This column has calculated material cost, throwing off the basis of the entire formula. It’s like me saying **I don’t know the distance to the moon….It takes 2 hours to get to the moon, because ratio’s and stuff. Get your act together guys, this is just bad, bad and the first guy got it right by smelling something off. The actual, real life, calculated by people that have a clue, profit margins on smartphones are much lower than this.
O Bloody Hell says
David, production costs are trivial. The classic iPhone 4 was “Made In China”. The retail price of the device was US$600, which someone paid, over the course of time. The total amount China got for “making” the device? **6** bucks. Actual manufacturing cost is tiny. Most of the cost is in up front paid to Apple (about $200), another $200 paid to various IP owners. And the remainder of the $594 goes to pay for “components” which get shipped to the “maker” in China. This is screens, processors, batteries, camera widgets, and so forth.
The materials cost IS the manufacturing cost, for tech goods.
http://www.aei.org/publication/apple-iphone-designed-in-u-s-assembled-in-china/
That’s from 2010, but if anything it goes down, not up.
Nader Hisham Idkeidek says
I think distribution companies pay the shipping cost, and add that to the retail price
Joe Bloggs says
Regarding profit margin …
( Sell – Cost ) / Sell
… gives the GM (Gross Margin). The figures in the article are correct.
Rose says
Thank you so much for the informative article!
I always wondered how much it really cost to manufacture a cell phone.
It looks like there is indeed, a huge markup on cell phones.
Rose.
Sohail Kazi says
I always use to think how much profit the companies earn from their products & this article gave me a good idea . If we include other factors like workers salaries, advertisement then probably the profit margine would drop down by atleast 27 % I suppose.
Josh says
Haha why 27%? Very precise ?
Bob Smith says
Remember. These cellphones are made in countries where a worker may only make a couple of dollars a day. So most likely the profit margin IS huge for the company itself. Which is why companies love having their manufacturing facilities in foreign 3rd world countries where they rape workers through cheap labour and no benefits. EVIL!
SlowBro says
I’ve never quite understood why it is considered evil to pay workers more than any other job they can find in their own country. Why do you think they’re so eager to work in those factories?
Move those jobs to another country and you take food out of someone’s mouth. That’s evil.
Sterling Archer says
We have our own country and people to worry about. That’s not our business.
O Bloody Hell says
***SIGH*** NO BOB, it’s why the number of people in the world living in EXTREME POVERTY has made phenomenal strides in the last 30 years.
In 1985, the number of people living in extreme poverty was over 35%. As of about 2009, that had dropped to LESS THAN 10%.
A huge chunk of this is CHINA, where people making starvation wages in agriculture, if anything, are now doing VASTLY better for themselves as factory workers. Yes, for them, the “crap wages” you call “evil” are a major boon, because they lack both the living standards we have, but also the living EXPENSES we have to live with the standards we have available.
Their CHLDREN will have higher expectations, and their GRANDCHILDREN will probably match us by then.
A nation has to pull itself up by its own bootstraps, it can’t just be handed a 21st century economy.
Desmond says
***SIGH*** No O BLOODY HELL :), the world, lead by the US and China are not moving forward, but taking giant strides backwards. The materialist miseries that we call growth and standard of living are exponentially on the rise because of the so called consumerism and economic growth driven by non-sense marketing. If you define extreme poverty as not having food to eat, a shelter to protect from the natural elements, and basic clothes to wear, then yes. But that is ironic since agriculture provides food and clothing + shelter are its natural by products. So, as people we should stop feeding off of what the power and money hungry are creating in this world. It is and will keep leading to materialistic miseries of magnanimous proportions, and in the process destroy our lives by creating concrete and electronic junk both in our minds and outside it. Instead each individual should get educated by learning from nature. A reversal is only possible if there is a mass movement at the individual level. Peace and light to you and others in the world.
Krishna says
Really inforative. But how did you find out the cost of production?
By independent research or with reference to someones report.
Joe says
where’s the iPhone 7?
Joe says
7 Plus I meant
Seth says
No no no, I call total BS. It cost almost nothing to produce a phone, I can make one with a 3D printer. The cost you have is more reasonable to pay, but still ridiculous
JOKIEAMSAKIOJUIO says
Yes, Yes it is. :(
Miguel says
You have no fucking idea of what you are talking about. you guys learnt that 3d printers exists and believe that everything is possible now. The quality you get from a 3d printer cannot be equated to other production methods, or you think that the level or precision and fine detail that you get by cutting with a laser or pressurized water is the same one you get with 3d printers???? BTW even if we could make the external part, all electronic components are still impossible to manufacture using 3d printers. Think a bit before calling bullshit, and learn a book
Andrew says
Jesus, why did you get so angry? It’s all right to correct him but calm down.
Bob Smith says
And using “language” gives your argument more credence, you believe? It detracts from your point of view.
JonnyEnglish says
Actually, scientists believe that “language” can be a sign of a wider vocabulary and intelligence. Not saying its a definite, but it is a scientist’s feckin theory ?
Ken says
LEARNT? LMAO
Edward says
learn
lərn/
verb
past tense: learnt; past participle: learnt
skkkrrraaaa says
nerddddd
JOKIEAMSAKIOJUIO says
This is crap people are paying to much!!!
Jems says
Lol, “crap people”, you are absolutely right
Bob Smith says
Paying too much for everything.
AJ says
If the price is too high, find yourself some investers and make your own cell phones. Likely by the time you are up and running your own hreed will set in and your profit marginwill be the same as everyone else
Bob Smith says
And your postulation is based on what? Not everyone suffers from the disease of “greed”.
O Bloody Hell says
Usually, the ones who whine the most about the greed of others are just ticked off because they can’t be greedy for themselves.
There are rare exceptions, but they are exceedingly rare. Most people with issues about greed aren’t looking for an end to the wealth, they’re looking for their cut.
Dezmond K Goff says
I would gladly see an end to wealth.
Big picture, the problem isn’t greed itself, because anyone and everyone can be greedy, the problem is that greedy behavior isn’t penalized and collective behavior encouraged/incentivized. We have created economies that reinforce greed at multiple levels, but these are not the only economic possibilities.
DieterSL says
I think the prices are wrong! Just an example the galaxy S4 costs 244$ in production. Now the phone is a bit outdated and I know that the retail price must go down from 579$ as newer and better phones are coming up. But I guess the production cost is still the same or why should it go down? The funny thing is that I saw an advertisement under the article for the galaxy S4 for 199$ on Amazon so Samsung is not making any profit??? Come on guys…
Bob Smith says
I guess the cell phone companies truly believe the consumer is quite stupid and gullible as to even attempt to charge outrageous prices for a mass produced product that is quite cheap to make. Thank Henry Ford’s production methods now universally practiced.
O Bloody Hell says
Ah, yet another poster child for the Dunning-Kreuger effect.
It’s always hilarious when people abysmally ignorant of economics, finance, and business processes pontificate in depth on how **someone else** should run a business or an economy.
Beck says
Look…its greed driven…but here’s the title….you don’t HAVE to buy a cellphone…that’s a choice…that’s the premium you pay for bullshit you don’t NEED…yeah it sucks but that’s how it works…take the prices above and cut them In half…that’s what it actually cost at most…I work in the Industry…so believe me when I say you are being had..you have been duped
Bob Smith says
And what alternative is there to a cell phone. And, in today’s society and economy a cell phone is a necessity. I have lived without a cell phone. It is obvious you have not.
O Bloody Hell says
Strangely enough, people lived for millions of years without cell phones. Certainly they are convenient, but if you offer me a million dollars to go a year without a cell phone, I’ll happily take you up on it. Even today, with no COCOTs left anywhere.
Nancy Dann says
I think that is called ” the fleecing of America!!”
Beck says
Your average car for example costs 2\3 what you pay..that’s factoring in EVERYTHING…..think…henry ford…that’s why volume is crucial…initially, yes its expensive but literally within weeks cost drop exponentially…. After all the hype and buzz everyone buys…the more units sold the cheaper each phone is to produce…that you all are shocked blows me away…
O Bloody Hell says
That you think that 2/3rds somehow means someone is making a giant profit is hilarious.
There is not a single legal industry where, across the board, anyone makes more than 10%. And that 10% comes from the highest risk industries, usually,like pharma, where they pay billions to develop 1000 drugs, only 2 or three of which actually pay anything back at all. And there’s still huge liability risks, there, because you don’t need to prove the drug did anything wrong, you just need to convince half of a jury that the drug MIGHT have done something wrong.
“These 500 people crashed while driving a car and taking the drug. 10,000 other people took the drug and didn’t crash. And, out of 50,000,000 drivers, the chances of 500 random people having a crash is close to 100%….”.
“We, the jury, find for the plaintiff, and offer them craptons of money from the rich bastard fatcat drug companies because we can, not because there’s any evidence of any kind of wrongdoing.”
Beck says
Not to thirds what you pay I meant 1\3
Beck says
And news flash…that people can make that kind of cash is THE ONLY reason we have all the quote on quote great shit we have..you want Communism…go to Russia or China…see how great life is there?
Bob Smith says
And have you lived in Russia or China or are you basing your conjecture on general fodder that comes out of media and government? There are as much or even more cell phones in China and Russia than in the US. Obvious you have not lived overseas as I have and in many, many countries.
Aolderman says
Well Bloody Hell Says,
Not right in the jewellery trade they have a big mark up, it is like 140%. All the other things that have to be take into account of making said item, buying it to sale then putting it up for sale in your shop or shops then the said item sitting there for 4 months or more, and not be sold you have to take into account all of the time of a employee or employees pay and the rent of shop then you have the heating to be paid for and the electricity and all the other things that have to be paid out to keep shop opened. this is one thing none of you are thinking about. And no I am not a person with money I like to have some if anyone wants to give any away LOL !
I just wish a lot of people would just think before they put things online, they really do make theirselves look silly at times. There is no need or no point to it we cannot change the way things are done and never will be able to, so no point in keep moaning about them is there Hey !!!
Bob Smith says
Based on historical documentation cell phone companies are putting out garbage products. Poor quality, bad programming and plain omissions about what their products fail in performance have snow jobbed the public. Take the Samsung Galaxy S7 and it’s lithium-ion batteries burning up, remember that? And the holes in the programming of the units themselves. Which the company knew about before WikiLeaks.
David Maiolo says
I was hoping there’d be at least one comment on how most of this is bullshit. Cost of production is certainly not all that is involved in the cost a company makes to produce a smartphone. They have huge factories to build and maintain, mortgages, taxes, utilities, assembly workers, several thousands of engineers and specialty roles, marketers, marketing campaigns, administrative costs, research and development, testing, revisions, failed launches / product lines and many more that all come into play on how much a smartphone costs them. The profit margins are actually very low, and for many companies in this market, they became negative for many phones (Nokia rings a bell). You guys gotta pull your heads out is your asses. They are not making hot dogs and lemonade. It’s just a bit more complicated than what all you dummies (including the author) are rambling on about.
Bruce Kain says
Why is it we can buy a 42″ flat screen tv for a lot less than the cost of a decent smartphone ? There’s nothing special about what’s inside a mobile phone, a case, screen, battery, small camera, a motherboard with a processor, chips etc etc. It’s definitely a case of a mobile phone being worth more than the sum of its parts ! It’s all clever stuff but $700 – $800 bucks ….. really ??
John says
Because your tv doesn’t have android, it doesn’t have two cameras of which one is 4k and the other is 2k, it doesn’t have a two microphones, it doesn’t have a touchscreen, it doesn’t have a fingerprint sensor, it doesn’t have to have hardware that is built super small to fit into a certain form factor. It just really isn’t even comparable.
JesterDoobie says
Actually mine “tv” does indeed have all of those things, except a fingerprint scanner. Cost me $800 CDN but my phone cost $799. Didn’t (and won’t) ever understand how 1/25th the hardware=the same cost, not logical
BluLifeXLuser says
Don’t argue with those people who says Apple phone cost that much to produce. I bought a 13mp phone at $79, and have seen a LG Stylo 2 /w 13mp cam, 16gb-memory on sale for $50. Also low end android phone for $5. Apple phones cost below $30 to produce
Terry says
All cellphones are made in China
gnk says
Everything’s made in china.
xorkatoss says
hmm? aren’t you going to add the Note series? I would like to see Note 4,5,7,8 =/
Hayati says
Such high production cost ? No way wrong calculation .
DRB says
Here’s some other things to consider.
If you look at Apple’s Financial Statements, they are running at a 40% Gross Profit Margin which has been consistent for over 15 years and it’s a set goal they have because if they drop too much below, they are at risk of having to implement cost cutting measures like discontinuing products that make low margin, laying off employees, etc. Apple doesn’t want to relive the mid to later part of the 90’s. Also, Apple has higher overhead costs for things like R&D as they design more attributes of their smartphones than even Samsung. Apple develops the OS, Samsung installs a modified version of a Free OS called Android. Apple develops Development tools like Swift and Xcode, Samsung doesn’t. Apple develops apps that are free with their products, Numbers, Pages, Keynote, iMovie, etc. Samsung doesn’t. Apple has Apple Stores which are expensive to operate. Samsung doesn’t. Samsung only has a couple of retail stores, no where near 500 around the world. Apple has much higher salaries for their hardware and software developers since they are located in Cupertino which has high living costs. Apple has to maintain many datacenter for iMessages, etc. Samsung does not. Apple has to over compensate for their App Store, iTunes Store and Apple Music because those are running at only 30% Gross Margin.
Now, If you go to Apple’s Income Statement, the COGS is all of the costs. to mfg. the royalties for apps, movies, music, as well as the costs involved with warranty repairs, etc. It’s NOT based on how much it costs to mfg. the product. Also, Apple’s Revenues are not based on MSRP, it’s based how much they sold at what price it was sold at. When Apple releases a smartphone or computer, etc. not all of what they sell is sold at full retail, a lot of it gets sold through the reseller channel at a Discount, so let’s say their BOM is $400 for a $1000 phone, that’s a 60% Gross Margin, however, you have to add in the amortized warranty repairs, which is going to lower their profit margin and then you have to factor in whatever discount they give their resellers. That’s how that 60% Gross Margin on the cost to build the product, and then factor in their lower margin business and it ends up at only 40% gross for their entire sales. and then they have to deduct for R&D expense, SG&A, and taxes. And they end up at the end of the day at 20%, which they have to meet.
Samsung has a different product mix as they sell appliances, TV sets, components and other products at varying margins that Apple doesn’t even have made or sell. Samsung’s Gross Profits and Net Profits have been fluctuating where some years they are near where Apple is and some years they are below, and that’s because of their entire product mix. Now, if you look at Samsung’s total product list of Phones, they sell phones as low as $50. They also have hundreds of models.
If you look at Samsung’s ASP (Average Selling Price) that takes into consideration all of the models they sell in terms of Gross Sales for smartphone and they divide the total units sold and they end up with a $200 ASP. That means they are selling predominately phones priced at BELOW $200 rather than their top end flagship phones.
Apple, on the other hand, doesn’t sell phones under $200 and the majority of what people buy on a quarterly basis is more of their top end phones and their ASP is now a little over $700 in early 2018, up from $600 in 2016.