Is Something Rotten at Apple? iPhone Prices are Skyrocketing

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Source:businessinsider.com

Kaitlyn Tambasco, Assistant News Editor

iPhones can be found on some Christmas lists, in raffles, for birthdays, the list goes on and on

However, it is becoming less and less common to buy a new iPhone when it is not for a special event. On top of that, iPhones are becoming more and more expensive, matching or beating the price of many computers or laptops. For example, the newest iPhones can cost up to $1,449, depending on the model of the phone.

According to CNBC, Apple’s new iPhone prices are higher than Wall Street expected.

Assistant Professor of Economics Margaret Morgan-Davie said the first thing that came to her mind is smartphones are perceived by many now as a necessity and prices are high in large part because people will pay the high prices.

“New smartphones have ‘snob’ appeal; it’s cool to have the absolute newest technology,” Morgan-Davie said. “The more advanced options and apps the phone supports, the greater the demand and the more people will pay, not to mention the cooler it looks.”

Morgan-Davie suspects that the cost of production has little to do with pricing. The marginal cost has probably not increased much. Things like fixed costs, costs to purchase, complementary technologies to incorporate may be higher, but they have minimal effect on pricing.

Morgan-Davie also suggested that the major smartphone producers, such as Apple, have a significant amount of monopolistic power. She said that many of us will pay more for an iPhone than for a comparable Android due to real or perceived quality differences, as well as integration with complementary technology such as a MacBook or iPad.

“By introducing a really expensive top of the line new iPhone, Apple will sell some of the new phones, but by having the extremely high-priced phones out there, the less expensive, but still expensive, iPhones look like a bargain, and they may sell more of them as a result,” Morgan-Davie said. “This phenomenon has been observed in other market, such as smart TVs.”

Bethany VanBenschoten, assistant director of College Engagement, has had some problems with her iPhone 6. She dropped and broke her phone over a month ago, causing the screen to shatter. VanBenschoten said she is in no rush to get a new phone, even though she has needed a phone with a larger memory that will cost more money.

“I’ll deal with my atrocious screen and alert messages that my storage is low,” VanBenschoten said. “Now I’m waiting for a Black Friday or Cyber Monday Deal good enough to make me want a new phone.”

VanBenschoten has even looked into the “Certified pre-owned like new” iPhones that Verizon offers but said even those are over $500.

“I’ll ride out this phone probably until it dies, and then when I’m forced to, I’ll probably go to Facebook or Craigslist to get a used one like I did when I got this one,” VanBenschoten said.

Accounting student Brittany Smith has switched back and forth between having an iPhone and an Android. Smith currently has an iPhone SE and said if she ever cracked her screen entirely, she would just buy a new phone.

Smith said that although she has iPhone now, she misses her old Samsung because it was great and resilient. In her opinion, the cost of iPhones is a deterrent.

“Prices are high because they could charge a high price and customers will still buy it because they are loyal to the brand,” Smith said. “We all know old iPhones just happen to have problems around the time Apple is releasing a new iPhone, forcing customers to either upgrade or go to Android.”

 


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