Everyone has seen the product teardowns that purport to tell how much a company spends manufacturing products. Do they tell the whole story?

Professional product teardowns usually provide an estimated price for every last capacitor and give readers a sense of what the product cost to build. In the case of the 2Gb iPod Nano, the parts come to US$90.18 with another US$8 for assembly. This is just half of the product's list price of US$199 and gives Apple a gross margin of fifty percent?not too bad, is it?

Those kind of numbers can turn a thrifty geek's face red in no time. No one likes to get ripped off, and these reports can leave the public with the impression that Apple is buying a hot product for US$100, only to turn around and sell it for twice that. Aren't there laws against price gouging? Has Apple gone Exxon on its customers? Does Steve Jobs swim through a vault of gold coins like Scrooge McDuck?

Ars looks at the connection between product costs and corporate profits.