Evaluating The New iPhone’s Price Point

For every product in every industry, there’s a sweet spot price. That is, the price a consumer is willing to fairly pay in which the company also makes a decent profit so both parties are happy. Apple is not a company that usually excels in this area. The tech giant knows that brand-loyal customers will pour their pockets out for the newest iPhone models, regardless of the actual improvements the products have. But according to Gene Munster on Bloomberg, he says that Apple has “mastered” the tiered pricing system.

So why would producing the most expensive iPhone ever be considered “mastery” of pricing? It’s not because it makes Apple a lot more money, but it’s because of the options that customers have. With the three new models (the iPhone XS, XS Max, and XR) they each come with three different storage capacities. That means that, for each phone, you can start with the baseline prices (which aren’t outrageous) and increase based on your needs and incomes.

The XR allows people who still have the iPhone 6, 7, and 8 to upgrade to the X’s new technology at a reasonable starting price of $749. This appeal increases due to the fact that the majority of cellphone buyers utilize installment plans to cover the total cost of the phone. Going from there, the XS starts at $999 and the XS Max starts at $1099, meaning the base models are still expensive, but if you’re looking for the quality of the phone and you don’t care about the amount of storage, it’s a reasonable monthly payment that’s only about 10 dollars more than what current iPhone installment plans go for.

Now, I’m not trying to justify going out and buying the $1500, 256 GB iPhone XS Max, but it is noteworthy for Apple to create such a tiered pricing point that gives customers a window between $750 and $1500 to truly choose what they want/need in a phone and pay exactly for what they’re getting.

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9 months ago
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