How Much Money Do Apple Make From the Sale of an iPhone?

HuongDTM - Dec 14, 2021

The iPhone is one of the most in-demand smartphones in the world. But in market share in this sector, it was only third, coming behind Samsung and Huawei.

The iPhone is one of the most in-demand smartphones in the world. But in market share in this sector, it was only third, coming behind Samsung and Huawei.

Samsung has 22% of the market, Huawei 18% and Apple (the parent company of the iPhone) garnered 15%.

Tops in Profits, Not on Sales

But, surprisingly, when auditing time comes, the iPhone is the kingpin when it comes to profits. It earned 66% of the industry's profits and took 32% of the revenue in the year 2019.

The Cost of Making an iPhone

Logically, Apple could be adding in a substantial markup if it leads in profits but only third in overall sales.

Let's see how much it costs to make a single iPhone unit.

Let's set as an example the latest Apple smart mobile which is the iPhone 13 Pro Max.

Depending on the storage size of the model, it costs somewhere between $1,100 and $1,450 per unit.

That's quite a high price, because somehow the consumers have identified it with premium quality and Apple has become a trusted brand name.

But come to think of it. That's why it topped the industry's profits because the estimated cost to make a unit of the iPhone 13 Pro Max is only $490.50.

Here is a breakdown of the actual manufacturing cost:

Battery - $10.50

Screen - $66.50

Triple Camera - $73.50

Modems, Processors, and Memory - $159

Holding Material, Sensors, Assembly, and others - $181

Total - $490.50

Take note that these total costs don't include marketing and R&D (research and development) which should have a pro rata inclusion into the phone cost.

When it comes to labor costs, most iPhone units are assembled in mainland China by Taiwanese companies like Foxconn.

The minimum pay for a worker in an iPhone factory in China is $3.15 per hour, which is much lower than the US minimum wage of $7.25 per hour.

In 2018, it was noted that workers at Foxconn earn about $300 every month.

Contrary to public perception, the reason why the iPhone is assembled in China is not because of the cheaper labor costs. There are several other locations around the world that have even lower minimum wages.

The main reason is the skill set needed which is tooling engineering which is rare in the US but very much in large supply in China.

It also makes sense to ship the finished iPhones from China because it has 7 of the world's largest 10 ports inside its jurisdiction. If they will be transported from any other country in the world, including the US, this will add up substantially to the overhead costs in making an iPhone.

The iPhone is a Smartphone Icon

Making use of its image as being one of the most recognizable and influential brands, Apple is responsible for the continued rise of the smartphone concept through the iPhone series.

Apple first saw its reputation grow by leaps and bounds when its revenue leaped from more than $37 billion in 2008 to $65 billion in 2010.

Apple is one of the most recognizable brands in the world, responsible for the rise of the smartphone through the iPhone. It has also become the most valuable technology company in the world.

The iPhone saw Apple ascend to one of the most valuable companies in the world, with revenue increasing from $37.4 billion in 2008 to $65 billion in 2010.

Then revenue increased tremendously from 2009 to 2012, growing from $43 billion to $156 billion, propelled mainly by iPhone sales.

During these 3 years, Apple increased the manufacturing volume is shared with Foxconn, its partner in China. This was also the time when the iPad was launched and contributed $19 billion in revenue during its first year of launch.

As always, the US, its base country, always was the most significant market for the iPhone and Apple as a whole. While it's true that revenue has increased worldwide in all regions, the Americas have contributed 45% of all its revenue, and 40% from that came from the US alone.

Apple is not only the iPhone

The iPhone is still the main revenue-generating product of Apple, but its percentage share has decreased over the years.

The company has given more attention to its other promising merchandise such as the Airpods, Homepod, Ipads, Watch and Beats. And these products, in one way or another, are also connected to the operation of the iPhone. In other words, they enhance the iPhone experience.

In 2020, Apple had generated a $365 billion revenue of which 52% came from iPhone sales.

Services were the second-biggest division of Apple which shared 18% of sales. These consist of 194 million iPhone units, 71 million iPad units, 20 million Macs, and MacBook pieces.

The Home and Wearables Division, which grew by 25%, sold 110 million Airpods and also 43 million Apple watches in 2020.

This is the Apple division to watch because its numbers look promising. Not since the iPhone has a set of devices gathered steam and tremendously pushed up the sales of Apple as a whole.

If it is computed, Wearable, Home, and Accessories revenue have seen a 243% growth ever since they were merged together. It is estimated that Airpods alone will be a $10 billion breadwinner for Apple and the Apple Watch is forecasted to be continuously contributing from $12 to $14 billion on a yearly basis.

Furthermore, Apple Music garnered 72 million subscribers and Apple TV+ registered 40 million subscribers.

Apple will still be looking for product winners down the road. It cannot afford to let its guard down because its competitors are breathing down its neck.

It cannot just depend on the iPhone, the Airpods, and the Apple Watch forever. But tech-savvy is on Apple's side and the people at the helm will definitely hold on to the company's premium brand reputation with the public.