The recent release of the iPhone 8 and iPhone 8 Plus saw Apple increase the price of both devices with many left wondering how exactly this could be justified. Research from IHS Markit, published by Bloomberg, gives us a little more of an insight into what exactly drove this price hike.
The entry-level price for the iPhone 8 with 64 GB of storage costs Apple about $247.51 to make compared with $237.94 to make the entry-level 32 GB iPhone 7 that came out last year. Similarly, the entry-level iPhone 8 Plus costs $288.08 to make compared with $270.88 or the iPhone 7 Plus.
IHS has attributed this price hike to three of the phone’s parts: camera, memory and processing. The most expensive parts of the new iPhone are the screen and mechanical enclosures and the increase in base storage also plays a part in the pricing. The A11 processor costs $5 more per unit while the storage adds $6.
“The added value went to memory, camera, and processing. That’s where we can materially identify where they’ve improved the overall product, and hence why they can command a higher price for it,” according to Wayne Lam, an analyst at IHS.
“The iPhone 8 represents an evolutionary upgrade to the tried-and-true iPhone business formula,” he added. “We anticipated very little changes inside the devices, so the bulk of changes will come with the iPhone X.”
As it stands, both iPhone 8 models have been largely overshadowed by the forthcoming release of the iPhone X which will be the most expensive iPhone Apple has created to date starting at $999. Once the iPhone X is released in November, it’s likely that we’ll be giving it the same treatment in terms of what drives its price.
