quote: Apple's iPhone 5 16GB costs roughly $168 to make, but you end up paying $649 The iPhone 5, it turns out, isn't that much more expensive to churn out than its iPhone 4S predecessor. It costs about $35 more per unit; the phone's new A6 processor accounting for the bulk of that at $28. That brings the total manufacturing cost of the least expensive iPhone 5: the 16GB, up to an estimated $167.50, according to UBM Tech Insights. It's a decent amount of money, for sure. But $168 feels like a mere drop in the bucket when you stack it up to the phone's retail value of $649. Talk about a markup. As Venture Beat points out, some of that dough does go back into Apple's operations and marketing funds, but at the end of the day, it still ends up amounting to one hell of a profit. Need proof? Well, just in the last quarter alone Apple brought in $8.8 billion in net income, all thanks to its loyal fans overlooking the company's steep price tags. And those folks have no intentions of jumping ship, as proven by iPhone 5 pre-orders selling out in 60 minutes flat on Friday. The most notable differences in the sixth-generation handset are its larger 4-inch display, thinner body and totally redesigned “Lightning” dock connector.