It’s nearly impossible to be on a train, fly on a plane or walk down the street without spotting the iconic “b” logo. Beats has been extremely successful in marketing its headphones and now enjoys large market appeal. But with a sky-high retail price of $199, is there more to Beats than meets the eye?
Lots of optimizations are to be expected in a product manufactured in the millions of units: snaps and glue are used for assembly rather than screws (which require lots of human manipulation) and almost every part is injection molded plastic (which is essentially free at high volumes).
Anytime I take a product apart there are a few exciting surprises to solve some tricky problems. Here’s what I found for Beats:
Use of metal components to increase weigh
The two larger parts are cast zinc. Cast parts are similar to injection molded parts in that there is a tooling cost and a per-part cost. Compared to injection molding, the tool is marginally more expensive, but the per-part costs are higher, and the tools do not last as long.
The brilliant thing here is that the two large metal parts are not mirror images of each other — they are actually the same part! This means that only one tool would need to be made to produce both parts, which saves money in tool design and number of tools. It also makes the headphones easier to assemble, since there are fewer unique parts.
Complex mold design of headband
This is a somewhat common trick to make products feel more substantive.
From the flashing along the long snaps at the top of the part, I can tell there are two side actions that were used to create the undercut. You can see parting lines in the part right under the snaps, and at the bottom of the circle.
Minimal use of screws
While it’s difficult to accurately reverse engineer the COGS of a product, I will do my best with each product that I tear down. In this BOM, I break it down into several categories — plastics, metal parts and electronic parts.
*Plastic part price takes the following assumptions into account:
- 2 percent scrap rate
- 1 cavity / tool
- 20 percent regrind allowed
- No additives (Meaning not glass filled, etc)
- Machine rate, setup labor, and direct labor adjusted per component
- Cycle time of 15 seconds is assumed per part
- Markup is not included
- Tooling cost is amortized assuming 1M units
- No downtime factored into molding machine
- Assume simple tooling (It’s known that some of these parts have actions, but was not added to the tooling cost)
- Tooling cost assumptions are broad and based in China
- Production costs based on Asia. Somewhat conservative and broad
*Metal part price takes the following assumptions into account:
- 5 percent scrap rate
- 160 ton press
- 95 percent uptime, 8hr setup
*Electronics part price takes the following assumptions into account:
- Quoted from Zirui @ qty 6000 FOB
- CB with routing and v-score, 1 part placement
- 25 seconds to solder @ Shenzhen min wage RMB2,030/mo = US1.50/hr
- Exact equivalent not found; found 40mm x 5.6mm, 32 ohm, 25mW for0.75