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Comment by nowooski | Hacker News Reader

I don't imagine investors can be pleased that Apple has largely held iPhone prices constant since 2020 despite high inflation.

Charts showing the inflation-adjusted price of iPhones declining: https://www.perfectrec.com/posts/iPhone15-price

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Investors dont care about price, they care about margins. If the cost to build an iphone goes down over time (I don't know that it does, just something to check for) it doesn't matter that the price is the same.

My sweet summer child. Price increases are margin increasing events.

Using the phrase "my sweet summer child" violates like half of the comment guidelines and is a boring canned phrase to-boot. If you want to insult someone, at least be creative about it.

"Sweet summer child" actually is a kinda interesting insult—it was actually coined by Game of Thrones, and yet has so thoroughly spread that most people don't realize that. I certainly was shocked when I learned that, because I have never even read or watched the series, and so the entire in-universe meaning of it was lost on me—and yet from usage, it was incredibly clear what it meant. And it's catchy, to boot.

(There were some sporadic uses before Game of Thrones, but we're talking like 100 years before Game of Thrones, and the meaning was a bit different.)

Sweet summer child, it's been more than sporadically used in the American South long before Game of Thrones, and well within this century. GRR Martin just used what was already a well known phrase, and maybe the show made it trendy but he didn't "coin" it in any meaningful sense.

Do you have documented evidence for that? That’s the usual reaction (and mine, too, given my unfamiliarity with GoT), but every discussion around this turns up a few hits from the 1800s, and then basically nothing until GoT came out. Or maybe my info is out of date?

Consider an item that costs $80 to produce that you can sell for $100, netting $20 which is a 20% profit margin.

Say your input costs go up 20%, and due to increased competition in your market segment, you can only raise your sell price by 10%. $80 times 1.2 is $96, and $100 times 1.1 is $110, netting $14 which is a 12.72% profit margin.

The price went up, but the margin went down, so you are incorrect.

I assume we can all do the arithmetic. In the market, stocks will move based on price increases, since cost inputs are assumed to not move, or rarely move - COVID being an exception to the rule.

can you do the math but without the price increase to $110 and let us know how that margin compares to the 12.72% profit margin at $100?

If I understand your question, you’re asking what the profit margin would be if the cost went up 20% from $80 to $96 while the sell price stays at $100.

The profit margin would be 4%, $100-$96 leaves $4 of profit. 4/100=0.04, multiply that by 100 to get 4%.

To maintain your previous profit margin if the cost to produce goes up by N%, your selling price must also go up by at least N% at the minimum.

If sell price increase % is higher than cost increase %, your margin will expand. If the reverse is true, your margin will contract.

not if the cost of the item is also increasing due to inflation

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