A big story from Teardown.com is that Google Glass costs just $80 to produce. Yet, the price tag is $1,500. Investors would love to see that kind of margin, but according to Google, the $80 figure is absolutely wrong. Of course, the spokesman neglected to give Google’s figure, so we are left wondering.
The bill of materials comes in at $79.78, and the site lists out the component costs. Google Glass biggest expense? The processor which comes in at $13.96. Non-electrical components ring the register at $13.63, followed by the all-important ‘other’ at $11.92. Connectivity tracking adds another $10.79. All other parts in the breakdown are under $10.
Where the teardown gets a bit loose with the cost is probably the display area. It lists that out at $3 for display/touchscreen and glass. It is hard to imagine the viewing area costing $3 per set of Google Glass. Google’s issue with the $80 figure probably stems from that.
A big question remains, are you getting ripped off paying $1,500 for Google Glass? Seeing as it is highly doubtful that will be the retail price, the answer is a yes and a no. Early adopters are always paying the most. Prices come down, or in this case, the product emerges from beta. No one is forcing you to head bob and talk to your glasses.
If the $80 figure is accurate, then Google definitely has a margin winner on their hands. They can price it at $300 and make a small fortune. For now, we are left with Google saying no, and a site breaking down the components on a cost basis. Once the device hits retail and gets included in earnings, we will be able to take a look at what type of margins Google truly has on its first foray into wearable technology.