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From: torrie@cs.stanford.edu (Evan J Torrie)
Newsgroups: comp.sys.mac.misc
Subject: Re: Mac IIsi for sale...
Message-ID: <1990Dec20.162758.16597@Neon.Stanford.EDU>
Date: 20 Dec 90 16:27:58 GMT
References: <36714@cup.portal.com> <5350@crystal9.UUCP> <1990Dec13.035030.27241@bagend.uucp> <17358@natinst.natinst.com> <1990Dec17.064020.27189@bagend.uucp> <1990Dec17.225300.23301@athena.mit.edu> <1990Dec20.052010.4291@bagend.uucp>
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jan@bagend.uucp (Jan Isley) writes:

>rsfinn@athena.mit.edu (Russell S. Finn) writes:

>>Of course, not all of that margin is going to Apple; the dealers are presumably
>>getting a piece of that action.

>When Apple is making about 1,000%, the dealer's less than 10% does not even
>enter into the equation.

  Perhaps people should take a look at what some textbooks have to say
on the issue of cost.

  From Hennessy and Patterson, costs are divided into four categories:

  Component costs:  (Obvious)
  Direct costs: costs related to making a product, including labor, 
    purchasing components, scrap, and warranty.  (typically 25% to
    40%)
  Gross Margin:  company's overhead that cannot be billed directly  
    to one product.  e.g. R&D, marketing, sales, manufacturing 
    equipment maintenance, building rental, cost of financing, pretax
    profits amd taxes.  (typically 45% to 65%.  NB: Apple's gross
    margin has been around 53-55% for the past five years.  Sculley
    says this will drop back with the new strategy)
  Average Discount:  adds on the dealer discount to get the list 
    (typically 40%).

  They then procede to give an example for a typical workstation (8MB,
monochrome display, keyboard, mouse)

Component costs:  $2,145
Compononent +
  direct costs:   $3,003
Av. selling pr
(+ gross margin): $7,508
List price:      $10,010

  In other words, a five-fold increase over the actual hardware costs
of the machine.

  This is fairly typical throughout the industry, according to H&P.
Apple's figures don't look particularly out of line when you compare
them to these.

-- 
------------------------------------------------------------------------------
Evan Torrie.  Stanford University, Class of 199?       torrie@cs.stanford.edu   
"She's got a tongue like an electric eel, and she likes the taste of a 
 man's tonsils!"  - Rik Flashheart