Apple’s iPhone pricing: too high or too low?

“Apple iPhone followers got two conflicting pieces of data regarding its $499 price point. In one survey done by an online shopping firm Compete as reported by MacWorld UK, only one percent of the consumers who said they were likely to buy an iPhone said they would pay $500 for it,” Carl Howe writes for Blackfriars’ Marketing. “Sounds bad right?”

Online market research firm Compete surveyed 379 people in the US, most of whom had heard of the iPhone and have shopped for an iPod, to find out how interested they are in the device to produce the uncommissioned report. The iPhone is a combined music player and cell phone that Apple plans to start selling in the US in June and in Europe by the end of the year.

Among the 26 per cent of respondents who said they’re likely to buy an iPhone, only 1 per cent said they’d pay $500 for it. When Apple introduced the iPhone in January, it said it would cost $500 on the low end.

Forty-two per cent of those who said they’re likely to buy the phone said they’d pay $200 to $299.

Howe writes, “Now here, you have to actually wonder about that result and how they asked the question, especially when 42% said they’d buy one for $200 to $299. Did Compete ask those questions serially, or did they simply put the question up as follows:

What is the most you would pay for an iPhone?
• $500 or more
• $400 to $499
• $300 to $399
• $200 to $299
• less than $200

Howe writes, “Since this was an online survey, this format is quite likely. And it will give quite poor data. Why? Because it causes the reader to believe that there will be alternative prices for the iPhone that are lower than $500! And if Apple sticks to its mass-market luxury item strategy, there simply won’t be other prices available. The result: some of the people who said they’d only pay $200 to $299 will still buy the iPhone at $499 anyway [and], by the time Christmas of 2008 rolls around, Moore’s Law says that the price of the electronics in the iPhone will be half what they are now. Don’t be surprised if those 46% of consumers get their $299 iPhone then; they just have to wait eighteen months before it makes business sense for Apple to sell it at that price.”

More in the full article – highly recommended – here.

Related article:
Survey shows Apple’s iPhone a tad too expensive? – February 23, 2007


  1. These woulda, coulda, shoulda, iPhone ads… I mean articles have gotten pretty damn repetitive.

    The majority of people are used to getting whatever free or almost free phone their service provider offers. Some, who prefer some choice of phone, buy one that’s unlocked for a bit more money.

    It seems to me that at this point people don’t really “get” what an iPhone can really do. It’s not just a phone, or an iPod or a PDA or a Blackberry….It’s ALL those devices rolled into one and then some!

    With all this functionality jammed into one little box, battery life is the biggest concern right now.

    $500 isn’t cheap, but for what an iPhone appears to offer,it looks like a deal!

  2. Well its not realy just a phone. Considering a Sony Ericcson here in Australia is 500 bucks and dosn’t do anything the iPhone cant, I’d say 5 to 6 hundred (AUS) is a fair price for aphone with that many bells and whistles.

  3. The price is too high and ATT is one of the worst companies on the planet to deal with from a customer perspective.

    I’d love an Apple phone from a company like T-Mobile but I’d never EVER PAY to be an ATT (formerly SBC) customer. NEVER!

    How quickly people forget, Cingular consistently won for WORST CUSTOMER EXPERIENCE from J. D. Powers.

    Lets not forget the lies either, they consistently lied and manipulated the hell out of us users while stampeding over us to merge merge merge!

    Southwestern Bell, SBC, Cingular, AT&T, whatever they want to call it, IT IS CRAP, JUST SAY NO!

  4. Here’s the math for me:

    8GB iPod nano: $250
    Typical Camera Phone: $150
    Palm TX Large Screen PDA: $300


    Wow, iPhone saves me $100! ;^)

    And I agree with xxx on one point, I don’t want to switch phone providers. While my current, T-Mobile, isn’t great, EVERYONE in my family, much of my extended family and lots of my friends use T-Mobile, so ALL those calls are free. Couple that with Skype calls and it frees me up to get a cheaper monthly plan.

    Although, maybe I’ll change my mind some time around June or July…

  5. I got a PS3 60GB because it’s a good value.

    It plays BlueRay DVD’s and all regular DVD’s, including one’s I’ve burned on my Mac.

    It plays cd’s, MP3’s and AAC.

    It plays most all of my existing PS2 and PS1 games.

    It’s got a useful life well into 2010 and the capability to play more enriching games not even developed yet.

    It can access the internet with a limited browser on my big screen HDTV without having to get up to go to the Mac in another room.

    I will be buying a iPhone because it offers the same value for the money.

  6. The PERSONS (MDN magic word) that bitch most about the iPhone are the ones who can afford it the least. Like everything else in life. Apple’s not selling to you. It’s selling to the people who a) can afford it, b) will want the features and/or prestige it offers to be seen with one, and c) don’t care so much who provides the service contract.

    I use Cingular. No complaints.
    I can afford it.
    I don’t need it, so doubt I’ll buy it (unless they come out with a smaller form factor that just acts as a phone someday). I’m all ipodded out (5GB in the commuter car, 30GB in the long-trip car, and nano for snowboarding). I don’t want video, so there’s no reason to upgrade for me (i’m waiting to buy the right car with full ipod connectivity, so i’ll wait for the ipod that allows that).

  7. Not being a heavy cell user, VirginMobile has been a fantastic service that has saved me hundreds, if not thousands, of dollars over the years.

    Now if the iPhone were opened to VM, I’d probably get one…. but never with one of the typical “contract” carriers.

    MDN magic word “waiting”… as in probably forever for VM on iPhone.
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  8. I’m not buying an iPhone because the iPhone suffers the same limitation as all other cell phones: susceptibility to dead zones. Because I live in the mountains in a remote location, I am already disadvantaged and the iPhone cannot improve my mobile communications problem. I’d rather spend the $500 bucks on something more useful.

  9. In my opinion, yes – the price is too high. I’m sure that others feel that price is reasonable, but for me, the price, in addition to the likely steep monthly fees, makes it a ‘no deal’. I can afford the $500 price, I just won’t pay it and then have to shell out some ungodly monthly amount just to use my new gadget. I only use about 100 minutes of cell time per month (mostly to my wife’s cell…which are ‘free’ minutes), so I only pay $49/mo. – TOTAL – for my cell bill. I couldn’t care less about the built-in camera (I never use the one on my RAZR), I don’t want a built-in iPod (I prefer a separate unit), and I don’t need a lot of bells-and-whistles on my cell (I just need it to reliably make and receive calls) – the only compelling features, for me, are the WiFi capabilities and the PDA functions. Apple – make it a handheld computer and I’ll get one…but I don’t need the rest.

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