It costs Apple about a third as much to make an iPhone 7 as it charges you

Not cheap, for anyone.
Not cheap, for anyone.
Image: AP Photo/Richard Voge
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The cheapest iPhone 7 retails for $649, but new research suggests it costs Apple roughly $225 to build one.

Market research firm IHS Markit recently took apart the iPhone 7 to price out all of the individual parts that go into building the phone. According to its analysts’ research, those parts likely cost Apple about $220 to purchase, and about $5 to assemble. That means Apple’s newest phone only costs about a third of its price-tag, to make.

That’s actually far more expensive than the last iPhone model. Even though the iPhone 7 looks a lot like its predecessor the 6S, it has a few costly technological enhancements on the inside. The new phone has a brighter, deeper display, a new haptic engine that provides a range of buzzes and taps when you get notifications, and its storage was upgraded from 16 GB to 32 GB. (Apple wasn’t immediately available to confirm IHS Markit’s cost estimates.)

While Apple has spent more producing some phones in the past—the iPhone 6S Plus is currently the most expensive phone it’s ever built, at least until IHS takes apart the iPhone 7 Plus—the iPhone 7 is actually the most expensive flagship phone the company has produced, costing slightly more than even the original iPhone from 2007, at a time when the average smartphones were giant things with buttons and antennae.

Although parts and labor aren’t the only costs that go into the total cost of making a product like the iPhone—there’s research and development, marketing, shipping, and packaging, to name a few—it’s surprising that Apple has spent relatively so much on a phone that many have found underwhelming, and at a time when the company’s sales are stalling.

It’ll be interesting to see whether next year’s iPhone, rumored to be a complete overhaul, will be accompanied by a similar bump in cost.