Google Glass released to the public, retail markup is 900%

Google Glass was released to the public today, allowing anyone in the US who has a cool $1,500 USD in their bank account to purchase the device. However, a teardown published a few hours after the announcement shows that Google is charging users 10 times more to buy the product than it costs to make.

Average markup in tech is about 20%. You don’t make a lot of money as a retailer, which is why salespeople in Harvey Norman or Noel Leemings are always trying to sell your their insurance plans or services. Markup on insurance and services is often 100%.

A Google Glass teardown by IHS found that Google adds a 900% markup to its Google Glasses. The cost of the parts used to make Google Glass was found to be only $152.47 USD (175.34 NZD), while the company retails them for $1,500 USD ($1,7312 NZD.)

Obviously there are other costs which the company needs to cover, like the countless hours engineers would have spent designing the product, the years of trial and error, and all the different prototypes that would have been tested before the device was released.

But IHS says that the product still feels like a prototype. “The design employs many off-the-shelf components that could be further optimised,” an IHS employee said in a statement. “If a mass market for the product is established, chipmakers are expected to offer more integrated chipsets specific to the application that will greatly improve all aspects of performance, including processing speed, energy efficiency, weight and size.”

 

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Google has said that most of the cost of Glass is in engineering and software development, but in comparison, Apple only puts a markup of 230% on its iPhone.

Experts don’t think this study will change much, since most people who were going to buy a product that’s still in beta for $1.5k probably won’t be swayed by how much the markup is.

UPDATE: Google responded to this article saying, “We’ve seen this reported as well, and while we appreciate their attempt to guess the cost of Glass, that estimate is wildly off. Glass costs significantly more than their estimate.”

Believe what you will.

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