Opting for more RAM or storage when purchasing Apple devices has always been a costly business, with the company charging huge markups.
Apple said in its latest earnings report that even after the price increases, its margins were being squeezed by rising component costs. But analysis suggests the company is still charging three times its own costs for higher storage levels on the iPhone 18 Pro…
To be fair to Apple, some of the criticisms about the premiums charged for configuring a device with more memory or flash storage aren’t comparing apples to apples. SSDs used in Macs, for example, are very much faster than the lower quality third-party storage cards that people usually cite as proof of corporate greed.
Regardless, it is undeniable that the iPhone maker has always applied extremely high markups to its own direct costs. With the iPhone 17 Pro, for example, upgrading from 256GB to 1TB costs the buyer $400. A Wall Street Journal analysis cited by Macmonde said Apple’s cost at the time was $42, a markup of almost 1,000%.
Apple warned this week that memory costs would cut into its holiday quarter profit margins.
When you remove the customs duty refunds from the June and September quarters, the company’s and product’s gross margin would decline by approximately one point sequentially, primarily due to higher memory costs. Parekh added that the pressure on Apple’s margins is unlikely to ease anytime soon.
However, the from the WSJ the math suggests we probably don’t need to break out the violins just yet. The newspaper compares the same upgrade on the iPhone 18 Pro, where Apple increased the price difference to $600. Even though the Cupertino company pays significantly more, with an estimated direct cost of $192, that still amounts to charging customers more than three times the price Apple paid.
Photo by Logan Voss on Unsplash
FTC: We use automatic, revenue-generating affiliate links. More.
Gn bussni
