how much profit does apple make per iphone

How Much Profit Does Apple Make Per iPhone?

It costs Apple $570 to make an iPhone 13 Pro, and the company sells it at a base price of $999 to $1499. This makes Apple’s base markup on the latest iPhone model at 75%.

The economics of Apple’s business model

apple-business-model
Apple has a business model that is broken down between products and services. Apple generated over $365 billion in revenues in 2021, of which $191.9 came from the iPhone sales, $35.2 came from Mac sales, and $38.3 came from accessories and wearables (AirPods, Apple TV, Apple Watch, Beats products, HomePod, iPod touch, and accessories), $31.86 billion came from iPad sales, and $68.4 billion came from services.

In 2021, the iPhone generated over $191 billion for Apple, making up over 52% of the company’s revenues. Apple employs a strategy called reverse razor and blade:

razor-blade-business-model
The razor blade business model, also known as the razor-razorblade model, involves selling a product at a lower price to then selling a related product later for a profit. The razor and blade business model has been popularized by King C. Gillette, founder of the safety razor company Gillette, which sold a durable razor at cost while selling disposable blades at a premium.

Where in a razor and blade strategy, a company sells the main product at cost, while making money, on ancillary, consumable, products, which generates a continuous stream of revenues.

Apple deploys the opposite strategy.

The iPhone is enhanced by an unlimited number of apps available on the App Store, which are mostly free and make the whole smartphone way more valuable.

Thus, enabling the company to place a premium on its iPhone.

This is the key!

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