Your new HomePod is priced at $350, but Apple pays $216 to make the smart speaker. The profit margin might look good but it’s actually low compared to other products.
Apple’s products are expensive, but often they generate huge profit margins for the company. That’s the benefit of having what’s widely believed to be the best brand loyalty in the world. Products like the iPhone and Apple Watch can carry high price tags but still sell a healthy amount of units. The HomePod, however, wasn’t so cheap for Apple to make.
Compared to the iPhone and Apple Watch as well as smart speakers made by competitors, the HomePod doesn’t impress with the amount of money made on each unit sold.
Both the Amazon Echo and the Google Home have much larger margins. While Apple’s margin for the HomePod is 38%, Amazon sees 66% and Google nets 56%. For comparison, the Apple Watch released in 2015 cost $84 for materials and sold for $349. The difference with the HomePod is its premium technology including microphones, tweeters, a woofer, Siri’s display, and the A8 processor.
The data comes from TechInsights, a product analysis firm who gave details on the HomePod’s cost to Bloomberg.
It’s worth saying, though, that Apple has previously denied this type of estimate being correct. Companies never say how much it costs them to create a product, and Apple doesn’t want customers to think they’ve long overpaid for stuff that’s actually cheap to make. So you’ll just have trust the price tag being worth it.