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Manufacture cost is estimated to be roughly $30. Retail price of no-name, little-margin AirPods knockoffs corroborate this. I wouldn’t know where to begin with

Manufacture cost is estimated to be roughly $30. Retail price of no-name, little-margin AirPods knockoffs corroborate this. I wouldn’t know where to begin with research and engineering, since all their products benefit from audio research and testing, iCloud, device inter-connectivity, etc. AirPods wouldn’t be any good without years of prior work on iOS. But they reportedly assign development costs roughly equal to manufacturing costs, which would put them at $60 and $100 of margin. This would make them contribute more to Apple’s target margin than the average product. This value is possible because of the state of the market, for whatever reason.

Spivak 4y ago
> Retail price of no-name, little-margin AirPods knockoffs corroborate this. I want to push back on that because the no name brands are cost cutting by just repackaging cheap off the shelf bluetooth boards, speakers, and batteries. They do make for a perfecty serviceable pair of earbuds but they aren’t what you should be price comparing to which is other manufacturers making actual comparable products from Sony, Google, Bose, Beats, Samsung which range from $100-300 but mostly hover around $200. Go with a 50% markup from wholesale to retail and you’re looking at probably $100-120 real manufacturing cost.
- 1123581321 4y ago
  You’re absolutely right about the difference in quality. The theory is that Apple‘a manufacturing scale gives them a competitive BoM, especially on small hardware that doesn’t require a premium processor or much storage. $100 in manufacturing would be too high as we know from teardowns that more expensive and complicated products like the watch are in that estimated cost range. Apple also negotiates better margins on wholesale than 50%. They wouldn’t make much money on $170 AirPods otherwise assigning $60-70 research and manufacturing cost, let alone $100.
- DaveExeter 4y ago
  No, nowhere near $100 to manufacture a set of air pods! I would guess the marginal cost is closer to $10-$15. If you add the cost of the tooling and manufacturing line, and NRE costs, maybe $25 a pair.

Spivak 4y ago

> Retail price of no-name, little-margin AirPods knockoffs corroborate this. I want to push back on that because the no name brands are cost cutting by just repackaging cheap off the shelf bluetooth boards, speakers, and batteries. They do make for a perfecty serviceable pair of earbuds but they aren’t what you should be price comparing to which is other manufacturers making actual comparable products from Sony, Google, Bose, Beats, Samsung which range from $100-300 but mostly hover around $200. Go with a 50% markup from wholesale to retail and you’re looking at probably $100-120 real manufacturing cost.

1123581321 4y ago
You’re absolutely right about the difference in quality. The theory is that Apple‘a manufacturing scale gives them a competitive BoM, especially on small hardware that doesn’t require a premium processor or much storage. $100 in manufacturing would be too high as we know from teardowns that more expensive and complicated products like the watch are in that estimated cost range. Apple also negotiates better margins on wholesale than 50%. They wouldn’t make much money on $170 AirPods otherwise assigning $60-70 research and manufacturing cost, let alone $100.
DaveExeter 4y ago
No, nowhere near $100 to manufacture a set of air pods! I would guess the marginal cost is closer to $10-$15. If you add the cost of the tooling and manufacturing line, and NRE costs, maybe $25 a pair.