I don’t know what exactly you’re referring to but I assume you mean the bill of material cost that sometimes goes around in headlines like “new phone only costs $150 to produce and is sold for $500” or something like that.
That’s a flawed way of looking at it because it ignores things like:
Shipping cost (both the final product and individual components)
Development cost
The % the retail store takes
…
And of course profit which ideally is used to finance the development of the next device and ofc the greedy execs at the end who put the rest in their pockets (that’s the only part which you can actually cut)
I’m not sure where you are, but I’ve worked in retail quite a lot of years. Where I am, now:
*R&D is paid for at some point
*Shipping is probably more expensive now, but is normally not that expensive
*Retail stores pay a flat rate per item, less in bulk
What is expensive:
*Venture capitalists
*BoD, large share holders
*Marketing (contained once brand recognition established)
*C-suite
*Real estate
R&D is a really big one though. It’s a very high price for smaller volumes of phones but as soon as you get into the bigger quantities you can save on R&D (per model) and pocket the rest as profit.
To me it makes a lot of sense that privacy phones cost more, even if you could at most shave $100 off the price with selling data. It’s economies of scale.
I don’t know what exactly you’re referring to but I assume you mean the bill of material cost that sometimes goes around in headlines like “new phone only costs $150 to produce and is sold for $500” or something like that.
That’s a flawed way of looking at it because it ignores things like:
And of course profit which ideally is used to finance the development of the next device and ofc the greedy execs at the end who put the rest in their pockets (that’s the only part which you can actually cut)
I’m not sure where you are, but I’ve worked in retail quite a lot of years. Where I am, now:
*R&D is paid for at some point *Shipping is probably more expensive now, but is normally not that expensive *Retail stores pay a flat rate per item, less in bulk
What is expensive:
*Venture capitalists *BoD, large share holders *Marketing (contained once brand recognition established) *C-suite *Real estate
R&D is a really big one though. It’s a very high price for smaller volumes of phones but as soon as you get into the bigger quantities you can save on R&D (per model) and pocket the rest as profit.
To me it makes a lot of sense that privacy phones cost more, even if you could at most shave $100 off the price with selling data. It’s economies of scale.