Over the past several weeks, the discussion among Apple enthusiasts has shifted from opinions on iPhone Pro pricing to a conversation about how Apple will design around the notch and what will be placed in the Home Button area. I can certainly understand why this shift has taken place, the leaked HomePod firmware has provided a treasure trove of details about the bezel-less iPhone and none of it has anything to do with price points. But I wanted to take a step back and bring iPhone pricing back into the conversation.
Most of the speculation I’ve read on the topic has targeted $1,000 as their ballpark estimate for the iPhone Pro’s starting price point. And I agree. Apple has to walk a fine line with this device. It must be priced in such a way that it is both attainable for a reasonable percentage of customers and expensive enough to keep the masses from buying in droves. My gut tells me that $1,000, give or take $100 is the sweet spot.
I haven’t seen much out-of-the-box discussion regarding the starting price points of the rest of the iPhone lineup, though. Everyone seems to assume that the upcoming 4.7- and 5.5-inch models will be introduced at the same price points as the current iPhone 7 and iPhone 7 Plus with last year’s models dropping in price by $100. But I’m not too sure.
All of the interest coming out of the event is going to be around the bezel-less model and, there’s certainly going to be a fair amount of grumbling about how expensive it is. Even if Apple finds the “perfect price point”, that price point is designed to keep a large number of people from being able to buy it. Apple’s manufacturing partners can’t manufacture enough parts to sell the iPhone Pro for $649, it has to be expensive. And that’s going to piss a lot of people off.
But what if, alongside the introduction of the most expensive iPhone ever made, Apple lowers the introductory price on the rest of the lineup? Here’s the starting price points I’ve sketched out with that in mind:
- 4-inch iPhone SE at $349
- 4.7-inch iPhone 7S at $549
- 5.5-inch iPhone 7S Plus at $749
- 5.8-inch iPhone Pro at $949
This would lower the introductory price of the latest iPhone models at every display size — $50 less for the 4-inch model, $100 less for the 4.7-inch model, and $20 less for the 5.5-inch model. If Apple wants to prevent a severe backlash coming out of this event, selling the rest of the lineup at a lower cost is a great way to do that.
This leads me to my pie-in-the-sky, it’ll probably never happen but wouldn’t it be cool if it did theory — what if Apple discontinued all of last year’s iPhone models and only sold the iPhone SE, iPhone 7S, 7S Plus, and iPhone Pro going forward? This type of broad-strokes lineup replacement happened with the iPod during its peak, why couldn’t Apple do it today for the iPhone?
The only downside I see with this proposal would be the higher cost of entry for the 5.5-inch iPhone. The iPhone 6S Plus is currently priced at $649, replacing their entire lineup with the aforementioned prices would increase the starting price of 5.5-inch iPhones to $749. Which doesn’t exactly fit with the whole iPhones are cheaper than they were last year narrative.
One solution would be to keep the 7 Plus around for a few months, at $649. And if Apple went this direction — starting from scratch with an all new lineup, keeping one model around to fill a price slot for a short while seems likely. The only other option would be to just live through the grief and point frustrated customers toward the incredibly affordable 4.7-inch iPhone. It might be too risky, but that’s the solution I’d advocate for.
An obvious criticism of my proposed price points is the gaps in between each of model. I suppose this could give competitors room to come in and steal some market share from Apple, but that’s what each model’s storage tier is for. Here’s another rough sketch with potential storage options:
- iPhone SE: 32GB for $349, 64GB for $449, and 128GB for $549
- iPhone 7S: 64GB for $549, 128GB for $649, and 128GB for $749
- iPhone 7S Plus: 64GB for $749, 128GB for $849, and 256GB for $949
- iPhone Pro: 128GB for $949, 256GB for $1,049, 512GB for $1,149
For each model, an additional $100 gets you more storage and an additional $200 gets you either a lot more storage or a larger display. This seems like the kind of value propositions that Apple likes to give their customers. And I think most buyers would find it easy to narrow down their options to find the right device for them.
The likelihood of Apple discontinuing all previous iPhone models is nearly zero, there’s no historical precedent for this beyond the release of the iPhone 3G, which discontinued the original iPhone. But I think it would further strengthen Apple’s brand as the premier smartphone maker — no matter what iPhone you buy, you’re buying the latest and greatest.
As for my pricing suggestions, I could certainly see Apple releasing the new iPhone lineup and setting their pricing as I’ve outlined above. It would help to shift everyone’s focus away from the sticker shock of the iPhone Pro and potentially lean the Apple community’s conversation toward the idea of iPhones being more affordable options compared to their previous lineup. And with the introduction of the far more expensive iPhone Pro, they might be able to change public perception without taking too much of a hit to their average selling price metric.
