Nexus 7 hardware cost breakdown shows that Google charges a $50 premium for $7.50 worth of extra storage.
Nexus 7 buyers who opt for the 16GB model are paying a premium for all that storage.
IHS iSuppli, a hardware research and market analysis firm, performed a cost breakdown of the components inside the Google Nexus 7.
According to their analysis, the entry-level Nexus 7 has a $151.75 bill of materials (BOM) and costs $7.50 to manufacture. The unit's IPS display and touchscreen are the Nexus 7's most expensive components at $38 and $24, respectively. Other big-ticket items include the Nvidia Tegra 3 processor at $21 and the battery at $12.75.
Then there's the memory. According to IHS iSuppli, the base-model Nexus 7's 1GB of RAM and 8GB of flash memory cost just $13.50. The top-end Nexus 7's 1GB of RAM and 16GB of flash memory cost $21. Therefore, the extra 8GB of storage is worth $7.50.
Given that buyers pay an additional $50 for the 16GB Nexus 7, Google earns a $42.50 premium on the additional storage.
Of course, Google isn't the only company to use extra storage capacity as a way to boost their bottom line. A similar analysis of the 2012 iPad revealed that Apple charges and even higher premium for its high-end tablets.