Apple’s Growth Relies in iPhone Pricing Power

Despite Apple widely expected to release three new iPhones next month, the company’s growth relies on its ability to price its phones.

According to a new report from the Washington Post, Apple is able and will be able to charge any price it wants for its highest-end phones — the cheaper models push customers towards the flagship model.

“Here’s the thing, though: Apple has never done well selling the ‘good’ phones in its lineup,” reads the report. “That has hardly mattered because the more entry-level models effectively serve another duty: They push people to the more expensive versions that Apple increasingly relies on for its sales growth.”

Despite its high price tag, Apple was able to sell an astonishing number of iPhone Xs last year. According to the report, the average iPhone sale price rose to $758 USD in the nine months ended on June 30 compared to $661 at the same point last year. This rise alone is a testament to the popularity of the $1,000 USD iPhone X’s selling power, the top-selling iPhone since it was released.

On the other hand, while everyone loves the iPhone X, the iPhone 8 and 8 Plus have now become largely forgettable, and especially as Apple’s newest iPhone lineup is just around the corner, the 8 models are barely mentioned.

According to the Washington Post, this is a pattern for the Cupertino company:

This fits with a pattern of Apple’s relatively low-end iPhones not setting the world on fire. Remember the iPhone SE released in 2016? Apple said at the time that some people wanted a relatively smaller smartphone when most phones were getting supersized. It could have been the iPhone for the masses, but the $399 iPhone SE has been relegated to a niche in Apple’s product lineup. The 2013 iPhone 5c was considered a budget alternative at $100 less than the $650 flagship model of the time. It is the Voldemort of iPhones. No one speaks of it.

While these lower-priced phones surely filled some gaps in Apple’s iPhone lineup, they weren’t smashing sales numbers — in each model year of the aforementioned “budget” iPhones, the highest-selling model was the high-end one. It’s obvious that a very large amount of iPhone users waited out the iPhone 8 models introduced in September of last year until they could purchase the iPhone X.

“The best looks even better if people compared it with the merely good,” reads the report.

So as we await the highly-anticipated 2018 iPhone lineup, “all eyes will be on the company’s sales of the larger-screen ‘best’ 2018 iPhone model that will further test the limits of Apple’s pricing power.”