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>If the Foxconn factory unionized, you can bet iPhones would cost hundreds of dollars more. I'd be willing to bet that they don't. iPhone prices are set at the

>If the Foxconn factory unionized, you can bet iPhones would cost hundreds of dollars more. I'd be willing to bet that they don't. iPhone prices are set at the highest price that Apple determines people are willing to pay, not by the cost to produce it; even the costs that do exist are mostly materials, not labor costs. Labor costs are close to 1% of the sticker price [1]. This is the same as the argument that erroneously claims that if you paid fast food workers well it would lead to $10 big macs, when other countries with much higher wages have comparable prices to ours. [1] https://www.investopedia.com/news/what-it-costs-apple-make-iphone-7-219-parts-5-labor-aapl-snssf/ https://www.investopedia.com/news/what-it-costs-apple-make-i...

adam_arthur 4y ago
Apple sets prices based on what they think will maximize their profitability. If iPhone cost $1M dollars, there are still people who would buy it. Demand is a curve, not a fixed value.
- andrepd 4y ago
  I'm not sure what you're saying, but GP was arguing that an increase in wages for manufacturing iPhone would eat at apples profit margins, not add to the products final price.
  - adam_arthur 4y ago
    Yes, and if margins decline or go negative, then price must be raised
- LordDragonfang 4y ago
  Sorry, I was being unclear. I meant "people" in the aggregate, as perhaps a stand in for the demand curve. And that Apple sets their price based on the highest point on that curve which still maximizes revenue, then uses their absolutely ridiculous amount of cash-on-hand to reserve capacity and set the supply curve wherever it would intersect that point on the demand curve. (Which is part of why Apple weathered the chip shortage better than most) i.e., at the scale they operate, they are beholden almost exclusively to demand, rather than supply, and what supply constraints they do have are mostly a matter of material costs and logistics as opposed to labor. As the other commenter points out, my argument is that this pricing method (and the comparatively tiny input labor costs) mean that the cost of labor has an effectively negligible effect on pricing, and only would eat into profits.

adam_arthur 4y ago

Apple sets prices based on what they think will maximize their profitability. If iPhone cost $1M dollars, there are still people who would buy it. Demand is a curve, not a fixed value.

andrepd 4y ago
I'm not sure what you're saying, but GP was arguing that an increase in wages for manufacturing iPhone would eat at apples profit margins, not add to the products final price.
- adam_arthur 4y ago
  Yes, and if margins decline or go negative, then price must be raised
LordDragonfang 4y ago
Sorry, I was being unclear. I meant "people" in the aggregate, as perhaps a stand in for the demand curve. And that Apple sets their price based on the highest point on that curve which still maximizes revenue, then uses their absolutely ridiculous amount of cash-on-hand to reserve capacity and set the supply curve wherever it would intersect that point on the demand curve. (Which is part of why Apple weathered the chip shortage better than most) i.e., at the scale they operate, they are beholden almost exclusively to demand, rather than supply, and what supply constraints they do have are mostly a matter of material costs and logistics as opposed to labor. As the other commenter points out, my argument is that this pricing method (and the comparatively tiny input labor costs) mean that the cost of labor has an effectively negligible effect on pricing, and only would eat into profits.