How Much Does an MP3 Player Cost to Make?
Did you ever wonder how much money these companies make when you buy that new hard dive based MP3 Player? Well here is a look at the costs associated with the 20GB iRiver H320. Material for the player itself costs $118.87 while the packaging costs $14.07. Putting it all together with labor, overhead, and other costs will add up to $2.05. The total cost to produce the iRiver H320: $134.99. When they sell the device direct at $299.99 they make a nice profit of $165 per unit. But you have to also consider that when sold in retail outlets part of that $165 will be the retailers’ profit.
For the most part all manufacturing and material costs will be with in the same ballpark. However, the costs may vary a bit by manufactures. For instance, Apple’s cost on packaging will probably be higher due to the materials and special designs they use.
[EET Asia]
Comments
laurent on September 13, 2005 10:44 AM
one important cost seems to be missing: research and development. it may explain partly the gap between manufacturing prices and retail prices.
Anonymous on September 14, 2005 8:10 PM
Yup, gotta pay the engineers who put in thousands of hours
Daniel J on September 16, 2005 2:07 AM
I for one, think its fair that companies whom have come up with a good idea for a product, prizes it acordingly. The market will pay the prize as long as its still unique, and then force the prize to drop.
Matt on September 17, 2005 3:28 AM
and what about distribution, manuals, various hardware/software licenses, translations, advertising, ...?
Aditya Kuber on October 6, 2005 4:40 AM
True. Costs like designing of the product and the packaging or even advertising are in a way intangibles and need to be spread over the entire products life which is undecided and companies would like to get that money back asap, right?
Nick on October 31, 2005 11:37 PM
Yeah, $165 is definatley not the profit margin for that iRiver. Most publicly traded organizations will publish their financial information - might be a better place to look to determine profits (would take some math, but the point is it's no huge secret).
Patrick on February 1, 2006 6:34 PM
I bought one of these mp3 players; it is a godd mp3 player, but not good enough to have such a large profit margin. If profit margins were adjusted to the quality of the product, i think this player would have sold better.
drew on March 4, 2006 6:45 PM
what about shipping the product, storing the product, Paying the hands that built the product, paying the software designers who make the thing run. paying companies to use their technology like SRS
Rita Vera on May 14, 2006 7:16 PM
i sinks dat dis mp3 player iz to expensive because it usually costs 100.00 at radieo shack
Zac on April 24, 2007 6:32 AM
i appreciate the breakdown, but who are your sources, please email me back so i can backcheck these numbers