Apple makes $$$ on iPhone

Iphone The Industry watcher iSuppli says that the new iPhone 3GS costs Apple just $178.96 to build. Apple makes $420 on each iPhone sold. They seem to imply that this is too much profit but they looking only at the cost of the handset; they overlook the cost of infrastructure, the cost of the excellent app store, and the cost of brilliant design. The iPhone's success proves that creating a product that people want to buy translates into low price sensitivity. We don't really care about the cost of goods sold; we care about the value of the solution. And if market demand is any indication, it seems plenty of people value Apple's solution. Apple has priced their product correctly, ignoring the costs and focusing on value. Have you priced your product on its cost or its value? The trick of course is to create a product that people value. That means you need to solve a problem that people want to pay to solve. As an aside, iSuppli's "About Us" page reads: iSuppli Corporation helps clients improve performance in the electronics value chain by providing them with the facts, analysis and advice they require to know precisely how to succeed. Huh?
Steve Johnson

Steve Johnson

Steve Johnson was a founding instructor at Pragmatic Institute, a role he held for more than 15 years before he left to start Under10 Playbook. In his return to Pragmatic Institute, Steve supports the complete learning path for product teams, ensuring they are fully armed for success. 

Over the course of his career, Steve has helped thousands of companies and tens of thousands of product professionals implement product management processes. He has worked in the high-tech arena since 1981, rising through the ranks from product manager to chief marketing officer. Steve has experience in technical, sales and marketing management positions at companies that specialize in both hardware and software. In addition, he is an author, speaker and advisor on product strategy and product management.


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