An iPhone generates approximately $US650 in revenue for Apple. This figure has remained fairly steady over time. Using deduction from overall margins, it’s possible to estimate the gross margin on the product to be around 55 per cent.
That means that the cost of goods sold (COGS) for the iPhone is about $US293. Is that a lot? Where does that money go? What else does it tell us about how the company operates?
To find out we need to understand the cost structure of phone building.