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The coolest running shoes at the Nike store this year are the Nike Air Max+ 2013. They retail for $180, but when you break down the costs for the materials and the manufacturing and labor at the Chinese factory where the shoes are made, you’re looking at a product that costs less than $10 a pop. The remaining $170 covers marketing (to make you believe the shoes are worth the premium price) and a handsome profit for Nike. The company reports revenues of about $25 billion a year.
It works the same way for many products in the tech world. As gadget enthusiasts, we accept the idea that products are worth what we’re willing to pay for them, and not what they cost in terms of product development, manufacturing, and materials. Nonetheless, it’s time to name names. Here are some of most egregiously high profit margins in the world of consumer tech.
Text Messages
Average cost: $0.20 per text
Average cost to provide: virtually nothing
The cost of text messages often gets a bad rap, and for good reason. Our tiny missives—160 bytes in size, at most—typically cost us 20 cents each to send and receive (assuming you don’t have a text messaging plan or haven’t gone over your limit). They cost essentially nothing to deliver, however, making the markup for an SMS message essentially infinite.
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 By Friendly Computers Copyright: 2010-01-28 |
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