Just a few days ago, a credible report from The New York Times came in claiming that Apple (NASDAQ: AAPL) plans to charge $999 for the entry-level variant of its upcoming premium iPhone, commonly referred to as the iPhone 8.
Based on this, as well as the rumor that Apple will only offer its upcoming iPhone 7s and iPhone 7s Plus in 64GB and 256GB storage configurations (though the premium iPhone could get a 512GB configuration), here's how I expect Apple to price its upcoming iPhone product line.
Nothing out of the ordinary
I expect Apple to price the 64GB iPhone 7s at $649, with the 256GB model coming in at $749 -- exactly how Apple prices the iPhone 7 today. Along those lines, I also expect the iPhone 7s Plus to start at $769 for the 64GB model, with the 256GB version being priced at $869 -- again, coming in at similar price points to the currently available 32GB and 128GB iPhone 7 Plus models, respectively.
Apple could then price the entry-level premium iPhone with 64GB of storage at $999, as rumored by The New York Times. From there, Apple could either opt to charge an additional $100 for each incremental storage tier (yielding a 256GB variant at $1,099 and a 512GB variant at $1,199), or it could choose to charge a bit more for each incremental storage tier on the premium model (say, $1,149 for the 256GB model and $1,299 for the 512GB version).
Given the kinds of customers Apple will be targeting with the higher storage tiers of the premium iPhone (e.g., hardcore iPhone enthusiasts and individuals whose financial situations allow them to buy "the best" without batting an eye), I think such a storage premium for the different premium iPhone tiers would work out fine in the marketplace.
This product stack would be great
The product stack I described above could be quite effective in pushing current iPhone users to upgrade to new models.
Not only would pricing the iPhone 7s and iPhone 7s Plus at the levels described here increase the value delivered to consumers compared to the current iPhone 7 and iPhone 7 Plus lineup in terms of storage (let alone all of the other feature upgrades that Apple will surely bring to the iPhone 7s and iPhone 7s Plus compared to their predecessors), but the smooth transition from the 256GB iPhone 7s Plus to the 64GB premium iPhone in the product stack should encourage customers to spend a bit more, as well.
The net effect I expect it all to have on Apple's iPhone business is twofold. I expect both iPhone average selling price increases (as many users shift to the $999+ premium iPhone models) as well as unit shipment increases due to both the compelling feature set of the OLED iPhone as well as the dramatically better value for the money that the upcoming iPhone 7s and iPhone 7s Plus should deliver over their predecessors.
10 stocks we like better than AppleWhen investing geniuses David and Tom Gardner have a stock tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor, has tripled the market.*
David and Tom just revealed what they believe are the 10 best stocks for investors to buy right now... and Apple wasn't one of them! That's right -- they think these 10 stocks are even better buys.
Click here to learn about these picks!
*Stock Advisor returns as of August 1, 2017