Or it will allow for some upgrades in the forseeable future without having to increase the price.
Bingo. I've read Apple has only one "committee" and that's the "Pricing Committee."
Incidentally, I went to an Apple store to look at and hold the iPad Mini. It is a very impressive piece of gear. I'm glad I sold my iPad2 and waited for the Mini. I'll being buying it very soon.
And lastly, if you've never held and iP5...I would recommend doing so. Really impressive and very light.
Don;t be fooled, Apple is paying a cheaper price for its parts than ifixit or regular wholesale price suggest.
Volume=Discount!
Maybe, maybe not. Apple typically sets tighter specs than the industry standard, so may pay more. For example, Apple has consistently set much higher RAM specs than standard - which is why third party RAM sometimes fails in Macs. Apple's use of more expensive capacitors than everyone else was also noted at one time.
But, in the end, it does not matter one bit. Apple's price is set by the market. If Apple is efficient enough to obtain a great margin, that is the benefit of their great supply chain. Even if their cost were 50% lower, why would they sell the product for less than the market price?
Besides, if you want to complain about margins, why aren't you complaining about Intel (gross margins in the 60% range) or Microsoft (gross margins in the 80% range).
you do know the difference between gross margin and net margin right ??
one is before all what you are saiying and the other is after
Well, no. How many multi million dollar GAAP businesses have you run? I shouldn't bother asking - the answer is obviously 'zero' since you don't have any idea what you're talking about.
COGS is the total of all costs that can be directly attributed to the product. Labor. Shipping. Packaging. Manufacturing overhead. Even things like electricity can be included in COGS if it can be directly attributed to the product.
Maybe, maybe not. Apple typically sets tighter specs than the industry standard, so may pay more. For example, Apple has consistently set much higher RAM specs than standard - which is why third party RAM sometimes fails in Macs. Apple's use of more expensive capacitors than everyone else was also noted at one time.
But, in the end, it does not matter one bit. Apple's price is set by the market. If Apple is efficient enough to obtain a great margin, that is the benefit of their great supply chain. Even if their cost were 50% lower, why would they sell the product for less than the market price?
Besides, if you want to complain about margins, why aren't you complaining about Intel (gross margins in the 60% range) or Microsoft (gross margins in the 80% range).
Well, no. How many multi million dollar GAAP businesses have you run? I shouldn't bother asking - the answer is obviously 'zero' since you don't have any idea what you're talking about.
COGS is the total of all costs that can be directly attributed to the product. Labor. Shipping. Packaging. Manufacturing overhead. Even things like electricity can be included in COGS if it can be directly attributed to the product.
And gross margin is always revenue minus COGS.
Another word for Gross Margin I know is Contribution Margin. That word has got the huge advantage of making a lot more obvious what it actually is: That part of the sales price that's available as contribution to the overall operation costs of the business that are incurred regardless of that certain piece of product sold. And costs of operations are just what jragosta has listed as selling costs (and maybe more). And if not all of the contribution margin is actually required as contribution for the operations, there may actually some profit.
That's not a gross margin. Similarly, the person who claimed that R&D costs are included in COGS is also wrong.
Once again (it seems like I have to do this every time iSuppli releases new numbers because no one seems to be able to remember how it works):
Revenue - selling price of product
COGS - Cost of goods sold (total cost of manufacturing the product. This typically includes all variable costs as well as costs directly related to manufacturing). This number is typically directly proportional to the number sold.
Gross margin - Revenue minus COGS
Overheads - costs that are not directly tied to manufacture of the product. These are typically fixed and do not depend on the number sold.
Net income - Gross margin minus overheads.
COGS includes:
Raw materials (this is the only thing iSuppli considered)
Labor and benefits
Outsourcing costs
QC cost
Shipping
Packaging
Manufacturing overheads
Cost of carrying inventory
Warranty costs (normally. They can be considered an overhead in some circumstances).
Overheads includes:
Selling cost (other than costs directly tied to the product such as seller rebates and/or commissions which can optionally be included in COGS if the company wishes)
Corporate overhead
Legal
R&D (could only be considered in COGS under very unusual circumstances that rarely occur)
Marketing costs
Most building costs (although under some circumstances, manufacturing space can be included in COGS)
There are a very few costs where the company has some flexibility - like some of the selling costs. A more common one is tech support costs. Most companies consider those to be an overhead, but they can be considered in COGS if desired.
Only one correction. I think you mean 'Operating Income' (i.e., EBIT), not 'Net Income' (see bolded part).
Another word for Gross Margin I know is Contribution Margin. That word has got the huge advantage of making a lot more obvious what it actually is: That part of the sales price that's available as contribution to the overall operation costs of the business that are incurred regardless of that certain piece of product sold. And costs of operations are just what jragosta has listed as selling costs (and maybe more). And if not all of the contribution margin is actually required as contribution for the operations, there may actually some profit.
Comments
Why report on some obviously misnamed "info"bit? Bill of parts is not "cost of iPad Mini"... It's not even build cost.
Quote:
Originally Posted by paxman
Or it will allow for some upgrades in the forseeable future without having to increase the price.
Bingo. I've read Apple has only one "committee" and that's the "Pricing Committee."
Incidentally, I went to an Apple store to look at and hold the iPad Mini. It is a very impressive piece of gear. I'm glad I sold my iPad2 and waited for the Mini. I'll being buying it very soon.
And lastly, if you've never held and iP5...I would recommend doing so. Really impressive and very light.
Maybe, maybe not. Apple typically sets tighter specs than the industry standard, so may pay more. For example, Apple has consistently set much higher RAM specs than standard - which is why third party RAM sometimes fails in Macs. Apple's use of more expensive capacitors than everyone else was also noted at one time.
But, in the end, it does not matter one bit. Apple's price is set by the market. If Apple is efficient enough to obtain a great margin, that is the benefit of their great supply chain. Even if their cost were 50% lower, why would they sell the product for less than the market price?
Besides, if you want to complain about margins, why aren't you complaining about Intel (gross margins in the 60% range) or Microsoft (gross margins in the 80% range).
Well, no. How many multi million dollar GAAP businesses have you run? I shouldn't bother asking - the answer is obviously 'zero' since you don't have any idea what you're talking about.
COGS is the total of all costs that can be directly attributed to the product. Labor. Shipping. Packaging. Manufacturing overhead. Even things like electricity can be included in COGS if it can be directly attributed to the product.
And gross margin is always revenue minus COGS.
Quote:
Originally Posted by jragosta
Maybe, maybe not. Apple typically sets tighter specs than the industry standard, so may pay more. For example, Apple has consistently set much higher RAM specs than standard - which is why third party RAM sometimes fails in Macs. Apple's use of more expensive capacitors than everyone else was also noted at one time.
But, in the end, it does not matter one bit. Apple's price is set by the market. If Apple is efficient enough to obtain a great margin, that is the benefit of their great supply chain. Even if their cost were 50% lower, why would they sell the product for less than the market price?
Besides, if you want to complain about margins, why aren't you complaining about Intel (gross margins in the 60% range) or Microsoft (gross margins in the 80% range).
Well, no. How many multi million dollar GAAP businesses have you run? I shouldn't bother asking - the answer is obviously 'zero' since you don't have any idea what you're talking about.
COGS is the total of all costs that can be directly attributed to the product. Labor. Shipping. Packaging. Manufacturing overhead. Even things like electricity can be included in COGS if it can be directly attributed to the product.
And gross margin is always revenue minus COGS.
Another word for Gross Margin I know is Contribution Margin. That word has got the huge advantage of making a lot more obvious what it actually is: That part of the sales price that's available as contribution to the overall operation costs of the business that are incurred regardless of that certain piece of product sold. And costs of operations are just what jragosta has listed as selling costs (and maybe more). And if not all of the contribution margin is actually required as contribution for the operations, there may actually some profit.
Quote:
Originally Posted by arch
((selling price-BOM)/Selling price) * 100
Uh, no.
Gross Margin = (Revenue ? Cost of Goods Sold) ÷ (Revenue).
Cost of Goods Sold ? BOM.
Add: Just saw that jragosta addressed this point before I did.
Quote:
Originally Posted by Philotech
Another word for Gross Margin I know is Contribution Margin.
No.
Quote:
Originally Posted by jragosta
That's not a gross margin. Similarly, the person who claimed that R&D costs are included in COGS is also wrong.
Once again (it seems like I have to do this every time iSuppli releases new numbers because no one seems to be able to remember how it works):
Revenue - selling price of product
COGS - Cost of goods sold (total cost of manufacturing the product. This typically includes all variable costs as well as costs directly related to manufacturing). This number is typically directly proportional to the number sold.
Gross margin - Revenue minus COGS
Overheads - costs that are not directly tied to manufacture of the product. These are typically fixed and do not depend on the number sold.
Net income - Gross margin minus overheads.
COGS includes:
Raw materials (this is the only thing iSuppli considered)
Labor and benefits
Outsourcing costs
QC cost
Shipping
Packaging
Manufacturing overheads
Cost of carrying inventory
Warranty costs (normally. They can be considered an overhead in some circumstances).
Overheads includes:
Selling cost (other than costs directly tied to the product such as seller rebates and/or commissions which can optionally be included in COGS if the company wishes)
Corporate overhead
Legal
R&D (could only be considered in COGS under very unusual circumstances that rarely occur)
Marketing costs
Most building costs (although under some circumstances, manufacturing space can be included in COGS)
There are a very few costs where the company has some flexibility - like some of the selling costs. A more common one is tech support costs. Most companies consider those to be an overhead, but they can be considered in COGS if desired.
Only one correction. I think you mean 'Operating Income' (i.e., EBIT), not 'Net Income' (see bolded part).
Quote:
Originally Posted by Philotech
Another word for Gross Margin I know is Contribution Margin. That word has got the huge advantage of making a lot more obvious what it actually is: That part of the sales price that's available as contribution to the overall operation costs of the business that are incurred regardless of that certain piece of product sold. And costs of operations are just what jragosta has listed as selling costs (and maybe more). And if not all of the contribution margin is actually required as contribution for the operations, there may actually some profit.
Quote:
Originally Posted by anantksundaram
No.
http://www.investopedia.com/terms/c/contributionmargin.asp#axzz2BNRbqvX7
Quote:
Originally Posted by Gatorguy
http://www.investopedia.com/terms/c/contributionmargin.asp#axzz2BNRbqvX7
You shouldn't believe everything you read on the internets.