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Obviously I understand the purpose of a COGS analysis to calculate gross margin, but an equally valid way to look at things is that for a mere $1249 you get to
by zaroth 8y ago
Obviously I understand the purpose of a COGS analysis to calculate gross margin, but an equally valid way to look at things is that for a mere $1249 you get to use a device that cost billions in R&D in order to develop the technical capability in order to produce it.
How much would it cost to produce exactly one iPhone XS Max? But through the magic of economy of scale, I get to pay a mere $1,249 and appreciate the full benefit.
Arguably even the benefits of having the device increase with scale, due to network effects.
The same thought process applied to that 60” OLED TV or the latest Android phone. It’s just worth stepping back and appreciating the incredible things we get to play with for such a relatively small cost just because a billion other people are also stepping up to buy one too.
- anoncoward111 8y agoThis analysis is partially correct but opens itself up to abuse. I can create some piece of work, for example a really intricate crayon drawing that took me 1,000 hours to produce. If I value my labor at $100 an hour (a number I arbitrarily chose), you now have the chance to buy something that cost 1,000,000 usd to produce. TLDR apple salaries are not a sufficient way to value the iPhone, since it's possible that Apple will some day just produce an expensive pile of shit. A device should only be valued based on what someone will pay for it, and what value it could be expected to produce.
- zaroth 8y agoArt is a bit of a special case though isn’t it, embodying precisely the opposite of “economy of scale”?
- perilunar 8y agoI hope your art is better than your maths! And 1000 hours is a very slow drawing, regardless of how intricate it is. Now if you had spend a few hundred hours tops, then at $100 per hour you are looking at $30k, which is not unusual for an well known artist.
- anoncoward111 8y ago0s confuse me :) Apple literally spends billions on R&D but it doesn't mean every dollar spent was necessary for the creation of your phone. For example I have a $125 phone that I consider to be a technological beast. It delivers impossibly high amounts of value in my life. And I'm sure it cost less for LG to build, too. I'll gladly pay those salaries compared to Apple.