Apple Is Making a Hefty Profit on Each iPhone 8 Sale

September 26, 2017, 2:46 PM UTC

Apple might not be selling as many iPhone 8 units as some expected, but it’s certainly profiting off the sale of each unit.

The tech giant pays $247.51 for the components that make up its 64GB iPhone 8, research firm IHS Markit told Bloomberg on Monday. At a retail price of $699, Apple is making a profit of $451.49 on the sale of each unit before additional costs like assembly are factored in.

According to IHS Markit, Apple paid $237.94 to manufacture last year’s iPhone 7, but that device was priced at $649, rendering a pre-assembly profit of $411.06. Apple, in other words, has found a way to make a bigger profit on a smartphone it pays more to manufacture.

Additionally, IHS Markit estimates Apple pays $288.08 for its iPhone 8 Plus, which at $799, gives the company a whopping $510.92 profit on each sale.

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Determining how much Apple (AAPL) actually pays for its devices can be difficult, if not impossible. The company keeps its component pricing close to the vest, and Apple CEO Tim Cook has said in the past that estimates on its costs are wrong.

What is clear, however, is that Apple makes a hefty profit on the sale of each iPhone. And even if demand for the iPhone 8 is lower than some had anticipated, the company’s higher profitability means Apple could sell fewer units than it did of the iPhone 7 and still hit its profit numbers.

The IHS Markit estimate comes just days after market researcher Susquehanna International Group estimated total iPhone X component costs of $581. But at a starting price of $999, Apple is still making a $418 profit on the sale of each unit before assembly.

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