Upgrading to an iPhone with 64GB of storage will cost you an extra $100, but Apple actually only spends about a tenth of that to pay for the bigger memory chips.
With the iPhone 6s and new iPhone SE both starting with a paltry 16GB, shelling out the extra cash for more space is practically a no-brainer, and that plays right into Apple’s plan to milk the margins on its higher end models.
The latest data from IHS Technology reveals that Apple likely makes an $88 profit off each upgrade to 64GB of storage. IHS analyst Wayne Lam told TechInsider that it only costs Apple about $12 more to build the 64 gigabyte model than the 16 gigabyte model.
Last year the tech firm estimated that it only costs Apple $236 to make the iPhone 6s Plus but the company makes $513 off each handset thanks to the $749 price tag. The cost of components fails to take into account the engineering, software design, test, marketing, spaceships, and other costs that go into making the iPhone.
Tim Cook has criticized product cost breakdowns in the past, saying they’re far from reality. IHS Technology hasn’t done a component cost breakdown on the iPhone SE yet. The firm says Apple’s incurred costs for components changes over the production life of the iPhone’s life, with most components costing more the newer a device is.