Most teardowns are done on smartphones to find out two things. One is the check the components that were used inside the device, sometimes looking for hidden or unannounced features. The other reason for a teardown is to find out how hard or easy it is to repair the smartphone, which is getting harder and harder these days. There is, however, also one other purpose for teardowns related to the first: figuring out how much it cost to make the phone. And in the case of the iPhone XS Max, it’s not that much apparently.
Let’s be immediately clear on one thing: smartphone makers sell phones at a higher price than what was used to build them. What TechInsights’ teardown and cost analysis simply shows is how much the components of the phone cost, as well as the assembly. So it shouldn’t be too shocking that the $1,100 iPhone XS Max only has a build cost of $443. It might still shock some, though.
Perhaps more interesting is the fact that, at least according to Reuters, Apple was actually able to push that price lower than what it could have been. It would have been around $520 had Apple decided to cut out a few components related to 3D Touch. Which, in the long run, didn’t seem to affect 3D Touch functionality on the iPhone XS Max adversely.
TechInsights also notes that its prices are really just estimates, sourced from suppliers at the time it did the teardown. Prices could have gone up or down before that and Apple could have even negotiated cheaper prices. Suffice it to say, however, the iPhone XS Max didn’t cost $1,100 to build.
So why the heavy retail price? Build costs don’t account for other expenses that include R&D, software, and marketing. These are the hidden “taxes” that consumers pay for in a product. Unfortunately, these are also harder to quantify so consumers really never get a clear idea of how much it cost companies and whether the retail price tag is justified because of those.