June 24, 2011

Why Macs Cost More

Matt Richman:

“Apple makes more money from the sale of one Mac than HP does from selling seven PCs.”

(via DF).

Hit the link to see Matt do the math leading to that conclusion.

Yep, Macs cost more. About $320 of that “more” is profit (Mac profit - HP profit, per machine), the rest is hardware and software costs.

If the average selling price of a Mac runs about $710 more than a PC (ASP of a Mac - ASP of an HP machine), and about $320 of that is profit, then the remaining $390 must be those higher costs. Apple’s computing hardware, and the software development behind OS X, actually cost more to manufacture. Given the volume their manufacturing partners are turning out and the squeeze to contain costs put on them by Apple, one has to wonder why.

The answer is fairly obvious to anyone coming to Macs after years of using commodity PC equipment: better design and build quality costs more. What you get is a machine whose hinges don’t begin to wobble in the first six months of use, and whose keyboard doesn’t degrade to a rickety mess of loose keys and hidden debris. I’ve owned or used at least a half-dozen Dell and Winbook laptops over the years. Each required at least one service call during its three-year life cycle, one as many as three, leaving a single piece of plastic from among the original parts. I’d bet that HP repair statistics are similar.

Apple customers are people willing to pay $390 more for computing hardware and software, and reward the company with commensurately higher profits. All I can add to Matt’s post is, “you get what you pay for.”