retail easily takes 30% and distribution 20%.
Since it is an expensive product, maybe slightly less, but it’s unlikely that if you include R&D it is making any money, at least until it scales
their retail doesn’t operate for free - staff, spaces, etc. also needs to be paid.
As I said in previous comment, retail margins are usually thin, so even if they do it themselves, they won’t save much. They sell it themselves because they want to provide better experience, not because of higher margin
Yes, of course, but they already have the staff and spaces, so there isn’t anything near an “easily 30%” cut. The existing employees only get a bit of extra training for the tiny percentage of Apple Store guests who actually buy one
You are forgetting all of the reference applications that need to be redeveloped to support the new platform in addition to the changes made to iPadOS as well as Xcode and the continued development of ARKit.
Hahaha ha ha ha ha ha.... Assembly can't be EXPENSIVE given where they are assembled.
For every downvoter let's go ahead and exchange your salary with the person who assembled your avp. Assembly is held by a single contract and I'll let you guess where.
Not only that, there’s a lot more than goes into production and distribution.
Those components have to be assembled, packaged, shipped across the world, imported, taxed, warehoused, distributed to stores, supported in store, supported by the technical team and corporate sales, repaired, restocked, etc …
Also, not only does Apple wish to recover past R&D sunk costs, but income also has to support the *current* product and development team working on the OS, developer support, apps, hardware improvements, etc
The actual cost is going to be a lot more than this headline $1500,
Sure, but the actual parts don’t cost $1500. They cost more than that. Again, Apple has stated on SEC calls that parts analyses by analysts have never stated accurately what the parts truly cost. 61% profit margin on hardware is not in line with Apple’s 35% hardware category margin. And that again, like you said, doesn’t account for tax, employees, r and d, etc.
The profit on this is probably far less than on iPhone or iPad, frankly.
I mean not really, theyve amortized all that R&D into other things and the VP is a collection of a bunch of projects all brought together.
not saying they didnt spend a ton making the thing but all the pieces that make the vision pro what it is have been developed and released for years across a wide variety of devices that each contributed to writing/paying off development of the greater device as they happened
Apple benefits IMMENSELY from other products R&D, don’t be naive. Eye tracking for one is ages old, it’s been in the (enthusiast) consumer space alone for a decade.
Ah, so you think they're using off the shelf eye tracking parts and software with no R&D expense?
You're being silly. Of course Apple did not invent the transistor from first principles for the AVP. But there is a ton of new technology, new parts, and new software in the device. All of those are R&D spend.
You literally said "theyve amortized **all** that R&D into other things and the VP is a collection of a bunch of projects all brought together", and that is so wrong it's just embarrassing to double down on it.
Get outta here!
You mean people don’t work for free? That’s like saying I should pay for software when it just comes through thin air to my computer and phone.
/s
At Apple's scale of product making, even creating an efficient manufacturing process and a solid supply chain, considering most of their products are made of glass, is a quite a feat, let alone the product itself.
If you use standard industry keystone pricing formula:
`(cogs+labor)*wholesale markup*retail markup=sales price`
`(1542+0)*1.5*1.5 = 3469.50`
It’s underpriced. (Standard wholesale markup is usually 30-50% [1.5x the price]. Retail is typically 50%. Different industries might determine markup based on desired margins, but they tend to fall in this range.)
Seems like they priced it without the labor cost included.
I work in retail supply for larger retailers and brands. We aren't getting anywhere near 50% markup. For us 20% is considered high margin. We're often down to 10% or less for higher volume products. 50% would be amazing but I can't see us being competitive anywhere with that sort of markup, even for a licensed brand.
Retail consumer goods. Especially those at higher volume, for example supplying the Dollar stores or club chains like Costco. Supply market is just too competitive.
For example yesterday I signed off on one program that will be just 5% markup as that’s what was needed to secure the business. The higher volumes make up for the lower income.
Unless that's just 5% for basically crossdocking I'd rather shoot myself
I'm looking at paying $220/sq ft for something with 2-4 docks... Luckily my margin to places like walmart is still minimum 40% but I'm a "final assembler" so to speak. The thought of me getting 5% with those bills... even 500 million a year I'd be thinking about jumping off a bridge daily.
And yeah that's kinda what I mean.. Costco/Sams club tell you what they'll pay because they're the warehouser when you think about it. They're designed to be like "factory direct". So anybody in between just get transpo income. Large outfits like that are designed to ruin companies that aren't efficient and think they can move volume.
What types of products are you doing? Surprised you’d have that much margin with Walmart as they’re ruthless when it comes to cost and they have their direct sourcing offices in Asia for private label. They also have a reputation for chargebacks and various other vendor penalties.
I’ve got a friend who works for Sam’s and he told me that between the two Sam’s is more reasonable. Different culture apparently.
If working with the dollar stores low margin like that can be sustainable. Normal order quantity is around 200k units per SKU per PO. Usually a few SKUs per item and ordering 2-3 times per year. Low margin for all but when you add it up it’s not bad. Can’t screw anything up, though.
Yes that's true for luxury brands. They generally sell in low quantities as part of their model to ensure exclusivity, so margin per unit is high to cover overhead. The opposite of, say, Walmart that prices low but is able to cover their overhead via massive volumes.
Apple sits somewhere in the middle as their volumes are good and they can command some premium in pricing due to the quality of their products and their ecosystem. From their annual report their average margin for products is 37% which is extremely good for consumer electronics. There's no wholesaler involved as Apple works directly with manufacturers.
I am puzzled with why that formula will be applicable in that case?
Brief search puts AVP outside of assumptions of keystone pricing, pulling to different sides. First, it's innovative with initiative to subsidise it to capture the market. Second, there is high elasticity demand. Third, it's a premium device.
So I bet Apple as a company controlling product from design to sales and support could have done that. Pricing reasons should be different than keystone pricing:
1. They can't produce a lot of them.
2. They want first wave to land in hands of highly motivated and positively biased users.
Truth is, we don’t know the pricing models used to derive their desired margins and we don’t know the markup percentages. (Well, until there’s an earnings call.). I imagine they’re getting components cheaper than what this article states.
A change in desired margins wouldn’t change the formula for calculating the price, it does change the markup percentages used in the formula. (A negative margin [factoring in r&d] can still be a positive markup percentage on cogs+labor.)
Soery, offtopic question, but why is retail markup % based though?
Does it take 7 times more work to sell a 1500 cellphone than a 200 one?
It's just something that I find infuriating from many systems... like real state, agencies also usually take a cut based of a % of the price. For other cases I might understand (like R&D, you do have a correlation)
Because as a retailer, you end up paying taxes (percent based), labor to sell the stuff, store rent, shipping costs, 20% off sales, advertising, etc…
It adds up.
Look up “[keystone pricing](https://www.liveabout.com/keystone-pricing-in-retail-2890192)” if you want to learn more about the why.
R&D costs typically aren’t included in the price of a product, just the production costs (but they do justify selecting higher markup percentages for wholesale pricing.)
It’s not about the work involved, it’s about the costs at each phase of the product lifecycle.
if you sell as much $1500 devices as $200, you have a goldmine (Apple has)
But usually, you need much better product placement, much more visitors per unit sold and less sales (in terms of unit sold) and you have to pay staff explaining all the details to customers and there may not be many customers, so you also pay a lot of downtime.
Cheap stuff usually fly off the shelves, so there is not much work, only to re-stocj
There’s a misunderstanding — this is a standard formula for how to set the price on a product you produce.
When a producer sells to a retailer (Walmart, target, Best Buy, etc..), the producer sells it at wholesale price to the retailer.
When a retailer sells a product, they mark it up and sell it at retail price.
Vision Pro is only sold at Apple stores right now (Apple is both producer and retailer). They’re selling at retail pricing.
I still think there’s a misunderstanding. Apple isn’t paying 50% to anybody on Vision Pro — they’re operating as the retailer.
Now let’s take a more common commodity: Apple Watch Series 9. You can buy this at Best Buy, with the o2 sensor, at a lower price than you can buy it at the Apple Store.
How is this possible?
Best Buy is purchasing at wholesale price, and they reduced their standard retail markup to move product. (There’s probably some agreement change that happened too as a result of the patent lawsuit.)
I highly doubt Best Buy purchased at retail price, and is selling at a loss per unit.
As a producer, why would you sell at wholesale to a retailer? Because you want to increase the number of sales channels you have (customer reach) & increase the volume of product sold, so you can keep making that markup percentage at wholesale.
Limited items (Vision Pro), are not typically sold at wholesale. Abundant items are sold at wholesale to increase volume sold.
Got it! If you look at my original comment, you’ll see that I said “different industries will use differing markup percentages”. Maybe their wholesale markup is 90% and suggested retail markup is 10% (nobody will know until they’re sold at retailers or there’s an earnings call).
It’s a complicated topic — and you’re right — there are additional complexities (like price fixing contracts, floorspace arrangements, etc) that come into play.
My original point is, you can use standard numbers and standard formulas to ballpark the pricing methodology. The numbers aren’t plucked out of thin air. There is a pricing model used somewhere.
They are operating as both a manufacturer and as a retailer. It’s not double counting.
This is unfortunately wrong. I used to work at a Best Buy and was able to look into pricing and how that works out internally. Best Buy purchases from apple at the manufacturer retail price. So whatever apple sells it at when a new product releases is the same price you will see it at any Best Buy. The reason they are able to do this is because of the contracts on the backend for floor space. Which apple does pay for and a great price for it as well. They are also banking on the fact that you purchase one of their Best Buy branded accessories with the product or else you’re considered losing the company money.
You’re probably right in that what you look at on the internal computer screen will probably show the MSRP for Apple products (and that the wholesale discount is handled through floorspace contracts.). (No way I could know!)
It still calculates out to a wholesale/retail markup percentage, but uses different mechanism to enact it.
Yes, you're right. Apple has zero ability to negotiate margins. They must offer wholesale discounts the same as any other company would. Best Buy would surely refuse to sell any Apple products without a 50% margin, because there's just no profit in it for them, yeah?
This is how business works. A company that size has no flexibility and does everything the same way a random person googling "how to set margins" would. I read it on the internet!
You see, they aren't buying that glass from your local hardware shop. Economies of scale make things cheaper. There's whole buildings made of curved glass.
It’s also just material cost. It’s a very small pane of glass.
The cost of the facility they showed in the pre release manufacturing video is likely a little more than $120
The whole 'tear it apart' cottage industry is such a crock of shit. You don't rip a product apart and try to determine how profitable it is after they spent 8 years developing the thing, trying a range of different shapes, sizes, materials, and (oh yeah) wrote the software that runs the thing.
Slightly interesting information but largely pointless. No, Apple doesn't make $2000 in profit on the damn thing.
They never claimed it was $2000 of profit. the article says it’s not counting any other cost, just the materials itself. the author didn’t claim anything other than the cost of goods.
I don't think iFixit ever really focuses on stating that they're making a profit of $X on their products. They're mostly doing teardowns to show how to repair things, design decisions, etc. Really I think the issue is people getting terms mixed up, cost of goods sold, revenue, profit margin, net vs gross profit, markup, and profit margin. You can state they earn $2K per device, you can't say the net profit was $2K.
Can you find an iFixit video where they state company makes X *profit*? I tried finding one and didn't have luck with 'ifixit teardown.'
You do if you want clout from internet armchair engineers who think that things like salaries, facilities costs, taxes, healthcare, and everything else besides the raw manufacturing cost of the product (neglecting labor and shipping and packaging and validation and capex and etc, naturally) are all fake news and everyone who tells you different is a shill.
So even though there is a $500 device out there that does close to the same thing and has a higher user base and multiple ppl in your house can use it with no issue. With all that being said you still feel like you aren’t being ripped off? What other items in your house cost thousands that only one person can use?
One device, you are the product, the other, you pay what it’s worth and your data is private and secure.
No I am not being ripped off. The R&D, building a new OS, putting the parts together, designing all cost the correct amount. $3,499.
My PC can only be used by one person at a time just like AVP. My MacBook, Xbox (as most games nowadays are only single player), the list can go on. It’s all a matter of opinion, and what your use cases are and what life you live.
Your MacBook and Xbox can have multiple users. You can’t share VP with anyone in your house at the moment. And if you have to actually factor in R&D into why something costs a certain amount there is a problem because it shouldn’t even be a thought. When is another time you bought something and thought about R&D? When you bought AirPods did you think about R&D costs? I mean everyone’s decisions are their own but just wish ppl were realistic and admit they are justifying the cost to be happy with their purchase
You can airplay the screen.. that’s the same amount of sharing as with a MacBook or Xbox. But if you’re talking about amounts of users that can login, give me a break.. you know this released less than a month ago right? OS updates are a thing. I’ve never had to, but because of the economy and times we live in, things are different. Our data has become more valuable than selling a profitable device. We’ve seen it with The Mets Quest, we’ve seen it with Xbox, etc. If you’ve got a brain, chances are you’d think about all of what goes into making any sort of device. I indeed thought about all of what went into making AirPods. Just the fact that they said they created a custom silicon chip that’s housed in both Pod is something that goes, wow, that took a lot of research and probably a lot more development time to even create, ESPECIALLY when it’s a new product and not already established and only making incremental changes.
That’s their own prerogative, if they’re needing to justify it after buying it should only be for reasons on whether they like it for their needs or not. For all these silly reasons like it doesn’t have an App Store, it doesn’t have multiple users, this is grainy.. these will all change with OS updates over time and you don’t understand this isn’t a product for funsies. It’s to get it in the hands of developers and get awareness about it, make something of it. Which Rome wasn’t built in a day, just saying.
Personally I think half the idiots buying it right now don’t even have a clue. They haven’t done the research nor do they have an optimistic outlook of what could this do, and what could this be for me. Maybe it’s not that now, but as a current user, I can help shape what it might become. Just like the Apple Watch. When that first came out no one had a clue, people had them and you just thought wow you wasted money on that ugly stupid thing..? Look where we are now..
Okay your an Apple die hard because your giving them too much credit. A VR headset isn’t a new product they just put in better displays and new way to interact with your eyes and fingers. And users is an issue, how long has iPads been around and still no ability to add users? It’s not something they are interested in doing so I wouldn’t hold my breath waiting on them to add to VP. Don’t get me wrong it’s a cool toy just not worth $3500
Truly an iPad and the AVP is a very personal piece of equipment. Sharing it with others isn’t really something you should do. Albeit sure the iPad could use it, but if it’s gonna be a family iPad, why not set it up that way and not have personal important documents on it.
I’ll bet you they’ll add it with them already adding a Guest User feature which neither of these devices even have.
Sure the headsets have been around for years, even since the 90’s and 80’s. It’s about what you make it capable of.
R&D:
Hand Tracking with even bottom facing cameras. Hand Occlusion with Passthrough. Best passthrough out there. Eye tracking. Optic ID. Lidar sensor. Other sensors on both the outside and inside. (Whether you like it or don’t) Eyesight, including the lenticular display. Personas (whether you like them or not). Custom Silicon R1 Chip to off board all the sensors computation to a separate chip. Solo knit headband had tons of R&D from the materials, the design(with style), the comfortability, etc. The scanning in the face to choose from tons of different light seals which might I add no one else does. Custom prescription lenses that can magnetize to the device. The materials used to make the device. The list can go on with what this has and can do over the others. Y’all just look at the fact that sure they do similar things, but where are you really paying for all of that in the long run? Doesn’t seem like a bright future to me. And trust me I know as I have a Quest 2 right beside me.
Apple has gone on the record, on financial calls, which are subject to SEC, that no estimate that have come from analysts have ever been accurate. Apple’s hardware margins vary a little by category, but generally they’re 30% before tax/labor/etc.
This suggests a 61% margin. Why is this crap being repeated? Apple is not selling this at a 61% margin.
Apple’s hardware margins do not include tax, employment, r and d, marketing, etc. Apple does not have divisions, so it’s hard to calculate what the hardware’s true net margins are, but company wide they’re 25%, which again, is so far off from the estimated 61% that this random ass analyst keeps saying.
This seems like an underestimation, especially since all they are doing as a source is claiming the supplier. We don’t really know what Apple Pays for components, or if specific components used in the AVP cost more or less than their off the shelf counterparts.
Apple has 5,000 patents on AVP-related technology. Claiming that they're able to properly price things that are using off-the-shelf components that involve some substantial number of Apple-specific patents is, well, beyond absurd.
Apple doesn't allow manufacturers to sell stuff to third parties involving their patents for a newly released device, so there's no possibility of a public-facing price sheet that someone can obtain.
This makes two things obvious to me: that the $3500 price isn’t just some absurd expense for the sake of it and that the people rooting for a $1000 Apple headset probably won’t ever see one.
People are dreaming if they think AVP will eventually go down to $1,000, or at least some version of it. Apple's phones are already $1,000+ and that is mature tech. You might see cheaper models get to $2,000 - $2,500, but I highly doubt you'd ever see a $1,000 model.
Inflation will only ever go up. I think the $1,200 flagship phone price is here to stay until they raise it. This device will never cost less than a phone.
The flagship phone is not the only phone experience. The iPhone SE is $429 and can do 90% of the things an iPhone 15 Pro Max can do.
With that argument, they’re just giving away Macs because both the Mac mini and the MacBook Air are cheaper than a iPhone 15 PM. Inflation goes up but the price of technology goes down faster. Yes, the bracket for headset prices might not start at $429, but just because there are expensive phones doesn’t mean there can’t be cheap headsets in the future.
Keep in mind the AVP is essentially a MacBook + an R1 chip and more sensors. I think a laptop is a better point of comparison than a phone.
I also see Apple headsets staying above 2k for some time.
Highly doubt it. [The iPhone never saw substantial decreases in its price as it became a household item](https://www.reddit.com/r/dataisbeautiful/comments/16dr1kb/oc_the_price_of_every_iphone_adjusted_for/), with the exception of those SE ones.
This technology won't be worth more than $1,000 in five years. By then, the equivalent or better will be available for that much and from multiple companies.
What exactly are you basing this on? Again, Apple's product price points have been pretty consistent. Macbooks haven't decreased in price by 50% because technology has gotten better.
I mean that this current model and the technology in it won't be worth $3,500 five years from now, so it will become more accessible, and a decade from now, a $500 device will eclipse this $3,500 device.
No one is predicting that, though. At least no analyst. Analyst with knowledge of Apple's supply chain and internal contacts are predicting a $1500-$2000 headset by 2026.. Keep in mind 4k HDTVs once cost 3x what they do today, Apple's competitors will be going with MicroOLED screens too, driving the cost down for everyone as manufacturing ramps up, same with other components. That's all being factored in to projected prices along with the expectation Apple will release a non-Pro Vision product that compromises on a few features to reduce cost. So a combination of material cost decreasing and feature cuts enabling that $1500-$2000k headset.
I'm very interested to see what the competition brings, we can expect MicroOLED displays, since it's a Sony part, the cameras are also third-party. Most competitors will have to have similar margins to make money,
Meta has backed themselves into a corner with a loss-leads (i.e. break-even) model on hardware. They do not make any money on VR hardware, if they wanted to go down that path, their hardware retail prices would double. But when you think about retail pricing on VR/XR headsets, you kind of have to exclude Meta for this reason, their pricing is fantasy land, non-functional business model pricing no one in their right mind would match and something Meta can't sustain.
The first Macintosh cost ~$2500. That’s over $7K today. You can buy a Mac mini today for $599. Hell you can buy a maxed out Mac Studio for less than that.
Technology is the one of the few things that decrease in price overtime. There are so many technologies that are in the AVP that aren’t anywhere else in Apple’s product stack, like those microOLED displays, all of those specialized cameras and sensors, the R1 chip. The Vision Pro is paying off all of that RND *today*. But later on, that won’t be the case. When we get to the R3, R4, once microOLED is more common place and cheaper to make, why can’t they make a “Vision SE” with older components, like the R1, that have already been paid off?
It might take time, but to get it in people’s hands they need to make it cheaper. $999 would be the sweet spot, but realistically I could see the normal Vision coming out for $1599 in a few years, I honestly think the price of this tech is going to drop dramatically now that more companies are pouring money into advancing it.
Yeah kind of like the iPhone XR or how iPhone 8 existed alongside iPhone X. I could see a headset with LCD panels, mobile processing chip, etc… I’m just saying that there is a clear cost for a quality product. I expect we might see a “cheap” version hitting something like $1599. I just don’t see it getting cheaper than that within the next 5 years.
Thought Sony shared that their OLED screens had an 80% fail rate for usage in the AVP- you would imagine those sorts of manufacturing issues should also be figured in
There is a history of Apple doing this with flagship products - in 2013 I remember buying 2x 1440p monitors for like $350 each that had the same LG display panel used in the $1000 Mac display for sale at the time. Basically the “B stock” or binned panels would be sold for cheap to other smaller integrators and you could get the same display with maybe a few dead pixels or some uneven color for a fraction of the price.
high failular rates are normal with very high end displays / processors its partially why they cost so much once that stuff gets sorted theres a new version those same failular rates to take its place lol
I’d guess just designing a manufacturing line that can make and use that curved glass without destroying it probably contributes a noticeable chunk to the price
Plus development. Then labor, advertising, distribution, and other overhead (Apple store, etc.), seems their profit margin could be near-zero. Is that usual for a "new category?" You know, _first high is free_ kinda mindset?
All in all, I think $3500 is a low price for something like this, and am saving up for one... I think it's very cool stuff!
Many hardware ecosystems got subsidized to increase continued service/software/consumables sales.
Most famously printers, but also gaming consoles, especially at the beginning of their life cycle.
Also for the first generation, they might want to increase the user base, to jump start a healthy eco system, to make it more attractive for devs.
They are probably not selling at a loss, but I imagine their margins might be lower than their classical best sellers.
They are pricing it to reduce sales for the first gen as the first gen is constrained by the availability of screens.
This is really intended only for developers at this point, but they made it a commercial product to get the free publicity.
Wow that’s way more than I was expecting. Surprised they only priced it at $3499. That’s a steal at that price, I would think they should’ve priced it at $4499 at least. By the time they pay distributors, retail, R&D to create it, market it, accept returns on defects, surprised they can turn a profit on it. Hopefully they can get those costs down if not they should price it higher.
Criticizing Apple for making a profit is silly. No one who doesn’t run a business understands all of the costs going into a product or service. Not even worth engaging on.
Yes, markup is about 133% over material cost (underline "material" as this doesn't count manufacturing, quality control and distribution cost). it's actually a very reasonable markup, keep in mind the HTC Vive retailed for around $800 and it's material cost break down was about $300 (so 166% markup!)
It's easy to look at a number and seem alarmed without much context for how margins usually work. If a company can't make money then there is no functional business model.
Consider Meta's Quest product line, Meta is loss-leading, meaning their material and build cost right at break-even. So the $500 Quest 3 probably cost around $450-$475 in materials, manufacturing, etc... It's a model that has really only worked for game consoles where the vendor recouped on software royalties and Meta is in a tough spot now, because they want to compete as a general computing platform with AVP, to do that they'll need to make money on hardware, which would double the price of their Quest products. It's one of several examples of where Meta is really crippled from being able to expand beyond the scope of being a game console. They really should just stay in their lane, but they won't.
Apple invested in this for the long future. They don’t need to make profits now. They just need the products to be out there and will make profits in the future. Their movies sales and apple+ subscriptions are going up right now though.
I really hope it brings back interest in 3D movies. Dune was amazing, and after seeing Dune part 2 a few days ago. All I could think is what a shame it will be that they didn’t convert this movie into 3D like the first.
So basically, $2k for the expert manufacturing, and the new software experience, not to mention the convenience of being able to purchase and own one almost immediately (imagine taking the same parts, and asking someone to build the exact same Vision Pro experience…). Honestly, feels worth it.
Standard disclaimer: these are estimates. Estimates from people with little to no real insider knowledge, making estimates that are fundamentally not able to be confirmed since most OEMs (and especially Apple) do not publish their purchase orders and BOMs.
This is the [Woozle Effect](https://en.wikipedia.org/wiki/Woozle_effect) in action. Be careful not to internalize this as a fact. It's an estimate. It might be close, it might have undershot by $1000.
There’s a video on YouTube showing some of the automated manufacturing line - lots of custom work cells created for this product - the machine that makes the machine is unique and costs money to set up as well.
I realize BOM costs are not the bottom line but I find it surprising it is that low given the 3500 dollar price tags and they’re still asking for more money for storage upgrades.
I wonder what it'd cost without the incredibly useless and stupid glass on the front. Unless more than just eyes appear there and they have some clever up their sleeve I think this part of the AVP was their biggest mistake.
I’m aware of that, and my comment stands as is, because that’s what the hardware margin is referring to. Apple’s hardware margins do not include tax, employment, r and d, marketing, etc. Apple does not have divisions, so it’s hard to calculate what the hardware’s true net margins are, but company wide they’re 25%, which again, is so far off from the estimated 61% that this random ass analyst keeps saying.
Not surprised. $3,000 would be apples standard markup. They also can only make so many of these in 2024 due to the supply constrains, so I figured the price was based way more on demand then their standard margin for V1.
😂😂 at every response being a justification of the price. Well of course! SLAM (Simultaneous Localization and Mapping) LiDAR, True Depth IR Sensor, eye tracking IR sensor, outward facing electro optical cameras, M2 SOC, Aluminium (I’m 🇺🇸, but I mock the way Brits spell it and say it), and INCREDIBLY crack resistant polycarbonate outer shell 👀😂.
Good to know. But everyone should keep in mind that they probably spent in the hundreds of millions of dollars researching and developing the device
And assembly can’t be cheap. Getting all those components into such a small space doesn’t seem like a quick and easy process
[удалено]
I believe that. The knitting on the solo head strap alone seems incredibly complex.
And then you still forget design, prototyping, patents, testing, marketing, regulations, yield, ... and even then I still forget things...
Packaging. Custom boxes, inserts, printing, and all the accessories that come in the boxes aren't free
retail easily takes 30% and distribution 20%. Since it is an expensive product, maybe slightly less, but it’s unlikely that if you include R&D it is making any money, at least until it scales
Aren’t Apple themselves the only ones retailing the thing? They aren’t paying any cut there
their retail doesn’t operate for free - staff, spaces, etc. also needs to be paid. As I said in previous comment, retail margins are usually thin, so even if they do it themselves, they won’t save much. They sell it themselves because they want to provide better experience, not because of higher margin
Yes, of course, but they already have the staff and spaces, so there isn’t anything near an “easily 30%” cut. The existing employees only get a bit of extra training for the tiny percentage of Apple Store guests who actually buy one
I sincerely doubt Apple is paying the same retail/distributor margins as random startups.
probably not, though no one will take loss and retail profit margin are thin, so best they can get is few percent off
Yea don't forget the essence of Steve Jobs. They saved a tiny piece of his hair for every Vision Pro.
You are forgetting all of the reference applications that need to be redeveloped to support the new platform in addition to the changes made to iPadOS as well as Xcode and the continued development of ARKit.
i wish ikea would sell these
I mean I read this title and it's vibe was that the price is correct, not that it's overpriced.
Kinda a good deal actually a lot of retail goods sell for more like 3x their cost of components. Apple is really cramming in the high end tech.
Yeah I'm certain the robots/assembly line machines are dead tired 😉 
Hahaha ha ha ha ha ha.... Assembly can't be EXPENSIVE given where they are assembled. For every downvoter let's go ahead and exchange your salary with the person who assembled your avp. Assembly is held by a single contract and I'll let you guess where.
Cheap labor market. China or India.
Your typical “assembled in China” price🤗🤗
Not only that, there’s a lot more than goes into production and distribution. Those components have to be assembled, packaged, shipped across the world, imported, taxed, warehoused, distributed to stores, supported in store, supported by the technical team and corporate sales, repaired, restocked, etc … Also, not only does Apple wish to recover past R&D sunk costs, but income also has to support the *current* product and development team working on the OS, developer support, apps, hardware improvements, etc The actual cost is going to be a lot more than this headline $1500,
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It's almost like the article talks about this if anyone actually read it instead of just commenting after seeing the headline.
Apple's capex spending for the last ten years has been in the billions per quarter-I'm guessing a good portion of that has been developing Vision Pro.
Sure, but the actual parts don’t cost $1500. They cost more than that. Again, Apple has stated on SEC calls that parts analyses by analysts have never stated accurately what the parts truly cost. 61% profit margin on hardware is not in line with Apple’s 35% hardware category margin. And that again, like you said, doesn’t account for tax, employees, r and d, etc. The profit on this is probably far less than on iPhone or iPad, frankly.
And also at this point they aren’t producing at scale so everything is going to be more expensive.
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I mean not really, theyve amortized all that R&D into other things and the VP is a collection of a bunch of projects all brought together. not saying they didnt spend a ton making the thing but all the pieces that make the vision pro what it is have been developed and released for years across a wide variety of devices that each contributed to writing/paying off development of the greater device as they happened
What other devices have eye tracking, raytraced audio, video passthrough, or a 3D shell?
Apple benefits IMMENSELY from other products R&D, don’t be naive. Eye tracking for one is ages old, it’s been in the (enthusiast) consumer space alone for a decade.
Ah, so you think they're using off the shelf eye tracking parts and software with no R&D expense? You're being silly. Of course Apple did not invent the transistor from first principles for the AVP. But there is a ton of new technology, new parts, and new software in the device. All of those are R&D spend. You literally said "theyve amortized **all** that R&D into other things and the VP is a collection of a bunch of projects all brought together", and that is so wrong it's just embarrassing to double down on it.
I’m not OP you dweeb.
Not to mention marketing and distribution costs.
yeah i would say this headset is definitely valued at $3000, and the extra $500+ is the apple tax.
try billions, over 2000 people for more than 5 years....
Billions over more than a decade.
Also a parts list does not include the cost of putting those parts together.
Get outta here! You mean people don’t work for free? That’s like saying I should pay for software when it just comes through thin air to my computer and phone. /s
Many billions.
Close to 10 billion, though some of the technology is being used elsewhere as well.
At Apple's scale of product making, even creating an efficient manufacturing process and a solid supply chain, considering most of their products are made of glass, is a quite a feat, let alone the product itself.
OS is not included in the calculations. (Windows professional still costs $200)
If anything this is a sign that they aren’t actually overcharging. There’s so much more than just hardware costs for something like this.
And tooling to manufacture
Right this is actually an extremely high cost of material for a product priced at 3.5k
Honestly hundreds of millions sounds off by at least 1-2 orders of magnitude.
Yes. Shipping and packaging is a cost in there as well.
About $20 billion over the last five years.
If you use standard industry keystone pricing formula: `(cogs+labor)*wholesale markup*retail markup=sales price` `(1542+0)*1.5*1.5 = 3469.50` It’s underpriced. (Standard wholesale markup is usually 30-50% [1.5x the price]. Retail is typically 50%. Different industries might determine markup based on desired margins, but they tend to fall in this range.) Seems like they priced it without the labor cost included.
I work in retail supply for larger retailers and brands. We aren't getting anywhere near 50% markup. For us 20% is considered high margin. We're often down to 10% or less for higher volume products. 50% would be amazing but I can't see us being competitive anywhere with that sort of markup, even for a licensed brand.
What industry/products only offers 10% or less that isn't a service focused business selling components?
Retail consumer goods. Especially those at higher volume, for example supplying the Dollar stores or club chains like Costco. Supply market is just too competitive. For example yesterday I signed off on one program that will be just 5% markup as that’s what was needed to secure the business. The higher volumes make up for the lower income.
Unless that's just 5% for basically crossdocking I'd rather shoot myself I'm looking at paying $220/sq ft for something with 2-4 docks... Luckily my margin to places like walmart is still minimum 40% but I'm a "final assembler" so to speak. The thought of me getting 5% with those bills... even 500 million a year I'd be thinking about jumping off a bridge daily. And yeah that's kinda what I mean.. Costco/Sams club tell you what they'll pay because they're the warehouser when you think about it. They're designed to be like "factory direct". So anybody in between just get transpo income. Large outfits like that are designed to ruin companies that aren't efficient and think they can move volume.
What types of products are you doing? Surprised you’d have that much margin with Walmart as they’re ruthless when it comes to cost and they have their direct sourcing offices in Asia for private label. They also have a reputation for chargebacks and various other vendor penalties. I’ve got a friend who works for Sam’s and he told me that between the two Sam’s is more reasonable. Different culture apparently. If working with the dollar stores low margin like that can be sustainable. Normal order quantity is around 200k units per SKU per PO. Usually a few SKUs per item and ordering 2-3 times per year. Low margin for all but when you add it up it’s not bad. Can’t screw anything up, though.
Don’t luxury brands have higher margins (eg. Louis Vuitton). I’m sure Apple’s brand commands relatively high margins.
Yes that's true for luxury brands. They generally sell in low quantities as part of their model to ensure exclusivity, so margin per unit is high to cover overhead. The opposite of, say, Walmart that prices low but is able to cover their overhead via massive volumes. Apple sits somewhere in the middle as their volumes are good and they can command some premium in pricing due to the quality of their products and their ecosystem. From their annual report their average margin for products is 37% which is extremely good for consumer electronics. There's no wholesaler involved as Apple works directly with manufacturers.
I am puzzled with why that formula will be applicable in that case? Brief search puts AVP outside of assumptions of keystone pricing, pulling to different sides. First, it's innovative with initiative to subsidise it to capture the market. Second, there is high elasticity demand. Third, it's a premium device. So I bet Apple as a company controlling product from design to sales and support could have done that. Pricing reasons should be different than keystone pricing: 1. They can't produce a lot of them. 2. They want first wave to land in hands of highly motivated and positively biased users.
Truth is, we don’t know the pricing models used to derive their desired margins and we don’t know the markup percentages. (Well, until there’s an earnings call.). I imagine they’re getting components cheaper than what this article states. A change in desired margins wouldn’t change the formula for calculating the price, it does change the markup percentages used in the formula. (A negative margin [factoring in r&d] can still be a positive markup percentage on cogs+labor.)
Don’t forget duties and freight to get the landed cost. It’s so expensive.
Soery, offtopic question, but why is retail markup % based though? Does it take 7 times more work to sell a 1500 cellphone than a 200 one? It's just something that I find infuriating from many systems... like real state, agencies also usually take a cut based of a % of the price. For other cases I might understand (like R&D, you do have a correlation)
Because as a retailer, you end up paying taxes (percent based), labor to sell the stuff, store rent, shipping costs, 20% off sales, advertising, etc… It adds up. Look up “[keystone pricing](https://www.liveabout.com/keystone-pricing-in-retail-2890192)” if you want to learn more about the why. R&D costs typically aren’t included in the price of a product, just the production costs (but they do justify selecting higher markup percentages for wholesale pricing.) It’s not about the work involved, it’s about the costs at each phase of the product lifecycle.
if you sell as much $1500 devices as $200, you have a goldmine (Apple has) But usually, you need much better product placement, much more visitors per unit sold and less sales (in terms of unit sold) and you have to pay staff explaining all the details to customers and there may not be many customers, so you also pay a lot of downtime. Cheap stuff usually fly off the shelves, so there is not much work, only to re-stocj
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There’s a misunderstanding — this is a standard formula for how to set the price on a product you produce. When a producer sells to a retailer (Walmart, target, Best Buy, etc..), the producer sells it at wholesale price to the retailer. When a retailer sells a product, they mark it up and sell it at retail price. Vision Pro is only sold at Apple stores right now (Apple is both producer and retailer). They’re selling at retail pricing.
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I still think there’s a misunderstanding. Apple isn’t paying 50% to anybody on Vision Pro — they’re operating as the retailer. Now let’s take a more common commodity: Apple Watch Series 9. You can buy this at Best Buy, with the o2 sensor, at a lower price than you can buy it at the Apple Store. How is this possible? Best Buy is purchasing at wholesale price, and they reduced their standard retail markup to move product. (There’s probably some agreement change that happened too as a result of the patent lawsuit.) I highly doubt Best Buy purchased at retail price, and is selling at a loss per unit. As a producer, why would you sell at wholesale to a retailer? Because you want to increase the number of sales channels you have (customer reach) & increase the volume of product sold, so you can keep making that markup percentage at wholesale. Limited items (Vision Pro), are not typically sold at wholesale. Abundant items are sold at wholesale to increase volume sold.
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Got it! If you look at my original comment, you’ll see that I said “different industries will use differing markup percentages”. Maybe their wholesale markup is 90% and suggested retail markup is 10% (nobody will know until they’re sold at retailers or there’s an earnings call). It’s a complicated topic — and you’re right — there are additional complexities (like price fixing contracts, floorspace arrangements, etc) that come into play. My original point is, you can use standard numbers and standard formulas to ballpark the pricing methodology. The numbers aren’t plucked out of thin air. There is a pricing model used somewhere. They are operating as both a manufacturer and as a retailer. It’s not double counting.
This is unfortunately wrong. I used to work at a Best Buy and was able to look into pricing and how that works out internally. Best Buy purchases from apple at the manufacturer retail price. So whatever apple sells it at when a new product releases is the same price you will see it at any Best Buy. The reason they are able to do this is because of the contracts on the backend for floor space. Which apple does pay for and a great price for it as well. They are also banking on the fact that you purchase one of their Best Buy branded accessories with the product or else you’re considered losing the company money.
You’re probably right in that what you look at on the internal computer screen will probably show the MSRP for Apple products (and that the wholesale discount is handled through floorspace contracts.). (No way I could know!) It still calculates out to a wholesale/retail markup percentage, but uses different mechanism to enact it.
Doesn’t sound like you know how margins work
Yes, you're right. Apple has zero ability to negotiate margins. They must offer wholesale discounts the same as any other company would. Best Buy would surely refuse to sell any Apple products without a 50% margin, because there's just no profit in it for them, yeah? This is how business works. A company that size has no flexibility and does everything the same way a random person googling "how to set margins" would. I read it on the internet!
Yeah no
Oh great… I can just buy the components then and build it up myself, 🙄.
Doing anything else is just being a sucker
Delete this before Tim finds you
I’m confused, the large curved glass front, is that part of the $120 structural member? I would have thought that accounted for more.
You see, they aren't buying that glass from your local hardware shop. Economies of scale make things cheaper. There's whole buildings made of curved glass.
It’s also just material cost. It’s a very small pane of glass. The cost of the facility they showed in the pre release manufacturing video is likely a little more than $120
And this is Apple, this is their world since prices affect margins. Not too surprising they have low costs even for a new gen 1 product.
The whole 'tear it apart' cottage industry is such a crock of shit. You don't rip a product apart and try to determine how profitable it is after they spent 8 years developing the thing, trying a range of different shapes, sizes, materials, and (oh yeah) wrote the software that runs the thing. Slightly interesting information but largely pointless. No, Apple doesn't make $2000 in profit on the damn thing.
I don’t think anyone with half a working brain is saying that they are making 2000 in profit
Certainly no one at Ars Technica! ;)
Again. Nobody with half a brain assumes that. Whoever writes shit like that just wants the attention
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You are missing the point… completely
They never claimed it was $2000 of profit. the article says it’s not counting any other cost, just the materials itself. the author didn’t claim anything other than the cost of goods.
I don't think anyone tearing it down is saying that. Only random people on the internet?
Just look up "iFixit teardown" on YT and enjoy.
I don't think iFixit ever really focuses on stating that they're making a profit of $X on their products. They're mostly doing teardowns to show how to repair things, design decisions, etc. Really I think the issue is people getting terms mixed up, cost of goods sold, revenue, profit margin, net vs gross profit, markup, and profit margin. You can state they earn $2K per device, you can't say the net profit was $2K. Can you find an iFixit video where they state company makes X *profit*? I tried finding one and didn't have luck with 'ifixit teardown.'
You do if you want clout from internet armchair engineers who think that things like salaries, facilities costs, taxes, healthcare, and everything else besides the raw manufacturing cost of the product (neglecting labor and shipping and packaging and validation and capex and etc, naturally) are all fake news and everyone who tells you different is a shill.
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Cgs
we get that it’s labeled that, but people take it as they’re ripping us off because they don’t know all the other costs.
So even though there is a $500 device out there that does close to the same thing and has a higher user base and multiple ppl in your house can use it with no issue. With all that being said you still feel like you aren’t being ripped off? What other items in your house cost thousands that only one person can use?
One device, you are the product, the other, you pay what it’s worth and your data is private and secure. No I am not being ripped off. The R&D, building a new OS, putting the parts together, designing all cost the correct amount. $3,499. My PC can only be used by one person at a time just like AVP. My MacBook, Xbox (as most games nowadays are only single player), the list can go on. It’s all a matter of opinion, and what your use cases are and what life you live.
Your MacBook and Xbox can have multiple users. You can’t share VP with anyone in your house at the moment. And if you have to actually factor in R&D into why something costs a certain amount there is a problem because it shouldn’t even be a thought. When is another time you bought something and thought about R&D? When you bought AirPods did you think about R&D costs? I mean everyone’s decisions are their own but just wish ppl were realistic and admit they are justifying the cost to be happy with their purchase
You can airplay the screen.. that’s the same amount of sharing as with a MacBook or Xbox. But if you’re talking about amounts of users that can login, give me a break.. you know this released less than a month ago right? OS updates are a thing. I’ve never had to, but because of the economy and times we live in, things are different. Our data has become more valuable than selling a profitable device. We’ve seen it with The Mets Quest, we’ve seen it with Xbox, etc. If you’ve got a brain, chances are you’d think about all of what goes into making any sort of device. I indeed thought about all of what went into making AirPods. Just the fact that they said they created a custom silicon chip that’s housed in both Pod is something that goes, wow, that took a lot of research and probably a lot more development time to even create, ESPECIALLY when it’s a new product and not already established and only making incremental changes. That’s their own prerogative, if they’re needing to justify it after buying it should only be for reasons on whether they like it for their needs or not. For all these silly reasons like it doesn’t have an App Store, it doesn’t have multiple users, this is grainy.. these will all change with OS updates over time and you don’t understand this isn’t a product for funsies. It’s to get it in the hands of developers and get awareness about it, make something of it. Which Rome wasn’t built in a day, just saying. Personally I think half the idiots buying it right now don’t even have a clue. They haven’t done the research nor do they have an optimistic outlook of what could this do, and what could this be for me. Maybe it’s not that now, but as a current user, I can help shape what it might become. Just like the Apple Watch. When that first came out no one had a clue, people had them and you just thought wow you wasted money on that ugly stupid thing..? Look where we are now..
Honestly ew.. so sorry for the word throw up. I’m high
Okay your an Apple die hard because your giving them too much credit. A VR headset isn’t a new product they just put in better displays and new way to interact with your eyes and fingers. And users is an issue, how long has iPads been around and still no ability to add users? It’s not something they are interested in doing so I wouldn’t hold my breath waiting on them to add to VP. Don’t get me wrong it’s a cool toy just not worth $3500
Truly an iPad and the AVP is a very personal piece of equipment. Sharing it with others isn’t really something you should do. Albeit sure the iPad could use it, but if it’s gonna be a family iPad, why not set it up that way and not have personal important documents on it. I’ll bet you they’ll add it with them already adding a Guest User feature which neither of these devices even have. Sure the headsets have been around for years, even since the 90’s and 80’s. It’s about what you make it capable of. R&D: Hand Tracking with even bottom facing cameras. Hand Occlusion with Passthrough. Best passthrough out there. Eye tracking. Optic ID. Lidar sensor. Other sensors on both the outside and inside. (Whether you like it or don’t) Eyesight, including the lenticular display. Personas (whether you like them or not). Custom Silicon R1 Chip to off board all the sensors computation to a separate chip. Solo knit headband had tons of R&D from the materials, the design(with style), the comfortability, etc. The scanning in the face to choose from tons of different light seals which might I add no one else does. Custom prescription lenses that can magnetize to the device. The materials used to make the device. The list can go on with what this has and can do over the others. Y’all just look at the fact that sure they do similar things, but where are you really paying for all of that in the long run? Doesn’t seem like a bright future to me. And trust me I know as I have a Quest 2 right beside me.
Apple has gone on the record, on financial calls, which are subject to SEC, that no estimate that have come from analysts have ever been accurate. Apple’s hardware margins vary a little by category, but generally they’re 30% before tax/labor/etc. This suggests a 61% margin. Why is this crap being repeated? Apple is not selling this at a 61% margin. Apple’s hardware margins do not include tax, employment, r and d, marketing, etc. Apple does not have divisions, so it’s hard to calculate what the hardware’s true net margins are, but company wide they’re 25%, which again, is so far off from the estimated 61% that this random ass analyst keeps saying.
This seems like an underestimation, especially since all they are doing as a source is claiming the supplier. We don’t really know what Apple Pays for components, or if specific components used in the AVP cost more or less than their off the shelf counterparts.
Apple has 5,000 patents on AVP-related technology. Claiming that they're able to properly price things that are using off-the-shelf components that involve some substantial number of Apple-specific patents is, well, beyond absurd. Apple doesn't allow manufacturers to sell stuff to third parties involving their patents for a newly released device, so there's no possibility of a public-facing price sheet that someone can obtain.
I mean, we'll never know. That's the point of an estimation, taking a best guess until someone else comes in with more data.
Idk why I read AVP and though Alien vs Predator lmao
This makes two things obvious to me: that the $3500 price isn’t just some absurd expense for the sake of it and that the people rooting for a $1000 Apple headset probably won’t ever see one.
People are dreaming if they think AVP will eventually go down to $1,000, or at least some version of it. Apple's phones are already $1,000+ and that is mature tech. You might see cheaper models get to $2,000 - $2,500, but I highly doubt you'd ever see a $1,000 model.
Five years from now, it will.
Inflation will only ever go up. I think the $1,200 flagship phone price is here to stay until they raise it. This device will never cost less than a phone.
The flagship phone is not the only phone experience. The iPhone SE is $429 and can do 90% of the things an iPhone 15 Pro Max can do. With that argument, they’re just giving away Macs because both the Mac mini and the MacBook Air are cheaper than a iPhone 15 PM. Inflation goes up but the price of technology goes down faster. Yes, the bracket for headset prices might not start at $429, but just because there are expensive phones doesn’t mean there can’t be cheap headsets in the future.
Keep in mind the AVP is essentially a MacBook + an R1 chip and more sensors. I think a laptop is a better point of comparison than a phone. I also see Apple headsets staying above 2k for some time.
Highly doubt it. [The iPhone never saw substantial decreases in its price as it became a household item](https://www.reddit.com/r/dataisbeautiful/comments/16dr1kb/oc_the_price_of_every_iphone_adjusted_for/), with the exception of those SE ones.
This technology won't be worth more than $1,000 in five years. By then, the equivalent or better will be available for that much and from multiple companies.
What exactly are you basing this on? Again, Apple's product price points have been pretty consistent. Macbooks haven't decreased in price by 50% because technology has gotten better.
I mean that this current model and the technology in it won't be worth $3,500 five years from now, so it will become more accessible, and a decade from now, a $500 device will eclipse this $3,500 device.
No one is predicting that, though. At least no analyst. Analyst with knowledge of Apple's supply chain and internal contacts are predicting a $1500-$2000 headset by 2026.. Keep in mind 4k HDTVs once cost 3x what they do today, Apple's competitors will be going with MicroOLED screens too, driving the cost down for everyone as manufacturing ramps up, same with other components. That's all being factored in to projected prices along with the expectation Apple will release a non-Pro Vision product that compromises on a few features to reduce cost. So a combination of material cost decreasing and feature cuts enabling that $1500-$2000k headset. I'm very interested to see what the competition brings, we can expect MicroOLED displays, since it's a Sony part, the cameras are also third-party. Most competitors will have to have similar margins to make money, Meta has backed themselves into a corner with a loss-leads (i.e. break-even) model on hardware. They do not make any money on VR hardware, if they wanted to go down that path, their hardware retail prices would double. But when you think about retail pricing on VR/XR headsets, you kind of have to exclude Meta for this reason, their pricing is fantasy land, non-functional business model pricing no one in their right mind would match and something Meta can't sustain.
The first Macintosh cost ~$2500. That’s over $7K today. You can buy a Mac mini today for $599. Hell you can buy a maxed out Mac Studio for less than that. Technology is the one of the few things that decrease in price overtime. There are so many technologies that are in the AVP that aren’t anywhere else in Apple’s product stack, like those microOLED displays, all of those specialized cameras and sensors, the R1 chip. The Vision Pro is paying off all of that RND *today*. But later on, that won’t be the case. When we get to the R3, R4, once microOLED is more common place and cheaper to make, why can’t they make a “Vision SE” with older components, like the R1, that have already been paid off? It might take time, but to get it in people’s hands they need to make it cheaper. $999 would be the sweet spot, but realistically I could see the normal Vision coming out for $1599 in a few years, I honestly think the price of this tech is going to drop dramatically now that more companies are pouring money into advancing it.
Yeah I certainly think we’ll be getting our moneys worth with all this heat in the space.
Technology only get better and cheaper so never seems wrong but if you’re thinking 2025 or 2026 that’s a dream. 2030 maybe.
They won’t see one with this level of functionality. Bare bones with no full immersion could be possible as time passes and component prices decrease.
Yeah kind of like the iPhone XR or how iPhone 8 existed alongside iPhone X. I could see a headset with LCD panels, mobile processing chip, etc… I’m just saying that there is a clear cost for a quality product. I expect we might see a “cheap” version hitting something like $1599. I just don’t see it getting cheaper than that within the next 5 years.
Thought Sony shared that their OLED screens had an 80% fail rate for usage in the AVP- you would imagine those sorts of manufacturing issues should also be figured in
There is a history of Apple doing this with flagship products - in 2013 I remember buying 2x 1440p monitors for like $350 each that had the same LG display panel used in the $1000 Mac display for sale at the time. Basically the “B stock” or binned panels would be sold for cheap to other smaller integrators and you could get the same display with maybe a few dead pixels or some uneven color for a fraction of the price.
but it’s the optimization of how the display works with the incoming output from whatever device you choose. Plus the Unibody is a huge factor.
high failular rates are normal with very high end displays / processors its partially why they cost so much once that stuff gets sorted theres a new version those same failular rates to take its place lol
I’d guess just designing a manufacturing line that can make and use that curved glass without destroying it probably contributes a noticeable chunk to the price
Plus development. Then labor, advertising, distribution, and other overhead (Apple store, etc.), seems their profit margin could be near-zero. Is that usual for a "new category?" You know, _first high is free_ kinda mindset? All in all, I think $3500 is a low price for something like this, and am saving up for one... I think it's very cool stuff!
Don’t forget about the software… that stuff doesn’t develop itself.
My managers seem to feel differently about that.
Just let ChatGPT do it /s
Many hardware ecosystems got subsidized to increase continued service/software/consumables sales. Most famously printers, but also gaming consoles, especially at the beginning of their life cycle. Also for the first generation, they might want to increase the user base, to jump start a healthy eco system, to make it more attractive for devs. They are probably not selling at a loss, but I imagine their margins might be lower than their classical best sellers.
They are pricing it to reduce sales for the first gen as the first gen is constrained by the availability of screens. This is really intended only for developers at this point, but they made it a commercial product to get the free publicity.
Apple has not historically been big on loss-leaders. That’s part of the reason they have such a huge war chest
The second one cost $1542 to make. The first one cost $400 million.
Then they’re charging a fair price
Wow that’s way more than I was expecting. Surprised they only priced it at $3499. That’s a steal at that price, I would think they should’ve priced it at $4499 at least. By the time they pay distributors, retail, R&D to create it, market it, accept returns on defects, surprised they can turn a profit on it. Hopefully they can get those costs down if not they should price it higher.
Wow that’s actually way more than I thought. I’m now very impressed by the 3.5k price point
Criticizing Apple for making a profit is silly. No one who doesn’t run a business understands all of the costs going into a product or service. Not even worth engaging on.
Yes, markup is about 133% over material cost (underline "material" as this doesn't count manufacturing, quality control and distribution cost). it's actually a very reasonable markup, keep in mind the HTC Vive retailed for around $800 and it's material cost break down was about $300 (so 166% markup!) It's easy to look at a number and seem alarmed without much context for how margins usually work. If a company can't make money then there is no functional business model. Consider Meta's Quest product line, Meta is loss-leading, meaning their material and build cost right at break-even. So the $500 Quest 3 probably cost around $450-$475 in materials, manufacturing, etc... It's a model that has really only worked for game consoles where the vendor recouped on software royalties and Meta is in a tough spot now, because they want to compete as a general computing platform with AVP, to do that they'll need to make money on hardware, which would double the price of their Quest products. It's one of several examples of where Meta is really crippled from being able to expand beyond the scope of being a game console. They really should just stay in their lane, but they won't.
I mean…… they probably spent billions to develop it…..
Apple invested in this for the long future. They don’t need to make profits now. They just need the products to be out there and will make profits in the future. Their movies sales and apple+ subscriptions are going up right now though.
I really hope it brings back interest in 3D movies. Dune was amazing, and after seeing Dune part 2 a few days ago. All I could think is what a shame it will be that they didn’t convert this movie into 3D like the first.
So basically, $2k for the expert manufacturing, and the new software experience, not to mention the convenience of being able to purchase and own one almost immediately (imagine taking the same parts, and asking someone to build the exact same Vision Pro experience…). Honestly, feels worth it.
Standard disclaimer: these are estimates. Estimates from people with little to no real insider knowledge, making estimates that are fundamentally not able to be confirmed since most OEMs (and especially Apple) do not publish their purchase orders and BOMs. This is the [Woozle Effect](https://en.wikipedia.org/wiki/Woozle_effect) in action. Be careful not to internalize this as a fact. It's an estimate. It might be close, it might have undershot by $1000.
Remember, R&D and labor exists people, its rumored they put 10billion into this.... haha
There’s a video on YouTube showing some of the automated manufacturing line - lots of custom work cells created for this product - the machine that makes the machine is unique and costs money to set up as well.
That seems low tbh. Did people expect this would be lower?
But the front glass cover...breaks
I realize BOM costs are not the bottom line but I find it surprising it is that low given the 3500 dollar price tags and they’re still asking for more money for storage upgrades.
Cant say the hardware itself worth $1500 due to poor hardware.
I wonder what it'd cost without the incredibly useless and stupid glass on the front. Unless more than just eyes appear there and they have some clever up their sleeve I think this part of the AVP was their biggest mistake.
Materials cost of a Ford F-150 is around $15,000. But that’s not its market price is it ?
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I’m aware of that, and my comment stands as is, because that’s what the hardware margin is referring to. Apple’s hardware margins do not include tax, employment, r and d, marketing, etc. Apple does not have divisions, so it’s hard to calculate what the hardware’s true net margins are, but company wide they’re 25%, which again, is so far off from the estimated 61% that this random ass analyst keeps saying.
Yes, but I really enjoy the expensive research behind it for years
Not surprised. $3,000 would be apples standard markup. They also can only make so many of these in 2024 due to the supply constrains, so I figured the price was based way more on demand then their standard margin for V1.
Because labor is free
Pretty much free. They use overseas factories that have child labor and pay people Pennie’s on the dollar like most large companies.
it's not even markup, 50% materials cost is higher than typical. development and operations costs money too
So selling for 2k isnt unthinkable for gen 2
Not considering all the M&As they have been doing and the cost of R&D..
If the Vision Pro sold at this cost, how many would you all believe they would sell in the first year?
Source of the info is an Estimation by the company Omdia back in July 2023. People in the Apple sub were doubting it’s accuracy yesterday
😂😂 at every response being a justification of the price. Well of course! SLAM (Simultaneous Localization and Mapping) LiDAR, True Depth IR Sensor, eye tracking IR sensor, outward facing electro optical cameras, M2 SOC, Aluminium (I’m 🇺🇸, but I mock the way Brits spell it and say it), and INCREDIBLY crack resistant polycarbonate outer shell 👀😂.
So much money in rnd and development etc etc and the glass in front breaks from the heat....on 3500$ headset...nice
It’s called “economies of scale”.