The majority of iPhone users today can all agree on one thing, iPhones are too expensive. iPhone prices are at an all-time high. It’s never been so expensive to walk into an Apple store to buy an iPhone.
This has affected the number of iPhones that Apple sells on a yearly basis. This has changed the way cell phone carriers sell their services to their customers.
Apple continues to raise the prices of their iPhones with the release of every model. However, this does not mean iPhone sales are at an all-time high.
Phones Are No Longer Subsidised:
Years ago, in the infancy of the cell phone industry in the U.S., most users did not purchase their iPhones at full price. Instead, they signed a 24-month contract with a cell phone carrier and they paid a lump sum.
The cell phone carrier subsidized the total purchase price of the phone by locking you into a 24-month contract. It was set up so part of your monthly phone bill would go towards paying off your phone.
In many cases, the total amount of money spent on the phone was high. However, it was split up into affordable monthly payments, which made it easy to manage.
However, this was a bad deal for the consumers, because in many of the service plans, after the 24-month contract was up.
The monthly bill did not go down, the cell phone carriers did this to force you to get a new phone every 24-months. This was done to ensure that you got your money’s worth and to keep you locked into a contract.
Things have changed a bit since then. You can still purchase monthly phone plans from the carriers, but now you can also purchase it directly from Apple.
The plans offered by Apple have built-in upgrades, which are structured as loans rather than cell phone contracts. This is much more transparent and when you’ve fully paid for your phone, it’s yours.
As a result of this, Apple developed another program called the iPhone Upgrade Program. With this program, you pay a monthly fee in exchange for using an iPhone for a year.
Then you turn in the iPhone for resale and get a newer model.
You also have the option of going to an Apple Store and buying an unlocked iPhone at full price with no monthly plans.
It’s not cheap to do this when you consider the price you’re paying in comparison to the old subsidized prices. However, there are no strings attached when you purchase your phone this way.
If you spend over $1,000 for an iPhone, you’re likely to hold on to it for more than 24-months. As a result of this, the number of iPhones that are sold each year has been declining.
iPhones Are Too Expensive:
When you consider the quarterly results for the last few years which were reported by Apple. You may get the impression that iPhone sales are growing.
But that’s not necessarily true, iPhone sales have been 5 percent or less for the past 11 quarters.
This is bad news for Apple because if there is a growth in iPhone sales, it’s very small it’s within the 2 to 3 percent margin.
Nevertheless, many people perceive Apple’s iPhone business as a strong business. This is due to the size of the company and its profitability.
Even though the company lacks massive growth. The iPhone continues to be a big business which makes Apple one of the most successful companies in the world.
Although iPhone sales are not rising very much, iPhone revenue has been doing much better. This may seem contradictory.
However, if you take the total amount of iPhone revenue that has been reported by Apple and divide it by the number of iPhone sold.
The number you get will be a measure of dollars per iPhone, this is also known as the average selling price or ASP.
Since the 4th quarter in 2016, the prices of iPhones have been rising and so has the ASP.
Longer Cycles Results In Higher Prices:
Apple has been making its iPhones to last longer. When the consumers hold on to their phones for a longer period of time, this forces the manufacturers to raise the prices.
This is what has happened with Apple. If you’re a loyal Apple customer who has been consistently buying the best iPhone every year.
You will have to spend much more money now to get the best iPhone. However, you should be able to get a good deal by selling your old iPhone and putting the money towards the new one.
Nevertheless, we can all agree that iPhones are too expensive, I believe paying $1000 or more for an iPhone is outrageous.