Every year, Apple fans eagerly await the newest generation of gadgets from one of the most successful manufacturers in the nation and, every year, they prepare for the onslaught on their wallets. The iPhone 5 is no exception, costing significantly more than competitors with similar hardware and still selling out within seconds of launch.
According to many top tech reviewers, there are better smart phones out there for a lower price, so how does Apple charge extra and still manage to put out one bestseller after another? The secret lies in careful, extensive branding and a reputation for solid quality.What about the price?
Without a contract, the iPhone 5 costs between $649.99 and $849.99, depending on its spec. According to market research firm IHS, the most advanced version costs about $250 to manufacture. That number includes all of the components and the labor to assemble them. Overall, the iPhone 5 provides fast, smooth performance and is built from durable materials, so its high manufacturing costs are to be expected.
On top of that, there are also the expenses of developing a new version of Apple's iOS operating system and all of the apps included standard with it. It is difficult to come up with a price for this per phone, but the salaries of Apple's programmers and graphic designers are tied into every price tag. Transportation costs of parts and the completed phones are the final contributors to the direct expenses of a phone.
The biggest buzz makers
Beyond that, Apple is a major advertiser that outspends its top competitors every year. The iPhone 5 was so wildly popular that the first run sold out before it hit the shelves, and most of that success could be contributed to the buzz surrounding it as far back as the release of the iPhone 4. Part of Apple's appeal is that each type of gadget has only one main brand, giving fans a single new release to anticipate. Kantar Media estimates Apple spent approximately $250 million over the last year in advertising for the iPhone, which is also factored into each phone's cost.
Finally, Apple can afford to price the iPhone 5 higher than any other mainstream smartphone simply because people will buy it anyways. Apple capitalizes on its signature style of sleek, small devices, and there's no denying that the iPhone 5 is a beautiful phone. Buying from Apple also gives users access to its extensive App Store, which still offers a far greater selection than Windows or Android.
Illusion of saving
Signing on to a two-year plan reduces the initial cost of the iPhone 5, though the monthly expenses eventually add up to more than the savings. For those who still think the price is too steep, there is currently rampant speculation that a cheaper iPhone 5S will be made available sometime in 2013. One thing is certain: Having already sold millions of iPhones in the United States alone, Apple has generated a very healthy profit to begin production on the next, and probably even more expensive, iteration of its classic smart phone.
About Author: This article was written by Andy G, a tech geek and Linux guru from Austria. At the present moment he maintains firmware and driver download website called HelpJet.net