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Apple Set To Raise iPhone Prices In 2014

With iPhones prices already

iPhone prices are already some of the highest smartphone prices on the market, but next year, it looks like Apple may be thinking of increasing them even more. The latest iPhone rumor comes from Investor’s Business Daily. It says the iPhone 6, arriving in mid-2014, will have better specs but also a higher price tag.

Susquehanna Financial Group analyst Chris Caso stated on Monday that “We see the potential for the iPhone 6 price point to move higher, to avoid the (profit) margin erosion that occurred when iPhone 5 launched.”

Caso also pointed out that “When iPhone 5 was launched, Apple’s phone margins declined because the new features (most notably the display) added cost to the bill of materials, yet the price point of the phone remained unchanged. Since we’re expecting a host of new features in the iPhone 6 (including a larger screen), we expect the bill of materials cost of the phone to increase as well.”

Normally Apple would launch a next-generation product (iPhone/iPad) at the same price as the previous model, and then lower the prices on the older models. This changed when Apple turned up the price on the current iPad Mini from $329 to $399, likely¬†due to the inclusion of a retina display. Caso claims that we could see this type of pricing strategy allow Apple “to maintain leadership at the high end and be competitive at lower price points, without sacrificing margins.”

With iPhone prices and Samsung Galaxy S4 prices set almost at the same level ($199 contract/$649 unlocked), Apple thinks they can up the price to distinguish its phone as more of a premium product over the flagship Samsung model according to Caso. This higher price point would most likely hit the majority of American consumers with an increase in the 2-year contract price, but in most emerging markets where the iPhone already cost over $1000, this would make a new iPhone an almost untouchable product.

via: IBD




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