hile the internet collectively went nuts for the Apple announcement today, there were many people left balking at the price of the newest model: the iPhone X.
At $1319 (US$999) it will be the most expensive Apple phone on the market, when it gets released in November. (You can pre-order on October 27.) Higher models will be up to $1529.
For that price, you could buy a four-night cruise for two in the Caribbean. You could buy 310 Grande lattes from Starbucks. You could buy over 2000 chicken McNuggets.
But will users shell out the cash for this latest, hottest, newest thing?
Of course they will, marketing Professor David Soberman at the University of Toronto’s Rotman School of Management.
“I think there’s going to be a group of people who will pay the extra amount for these features,” Soberman explained. “There’s a segment of consumers who are iPhone or Apple fanatics.”
The iPhone X (pronounced iPhone ten), was announced along with the upgraded Apple Watch, Apple TV and the iPhone 8 and iPhone 8 Plus. At $1329, it’s more expensive than Samsung’s Galaxy 8 which runs at about $1299. The iPhone 8s which start around $929.
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Soderman also explained that the higher price does have to do with the added features. Things like the facial recognition, used in its new Face ID and Animoji features, along with the infrared camera does give the iPhone X an added edge.
“What always happens with these things, a lot of these technological features is that you have to charge a higher price with them when they come out … because eventually, the competitors will have them,” Soberman explained.
“People will often, for something this fancy and leading edge, will find a way of justifying it.”
One way to justify it is because most people aren’t paying the full amount in one go. The phones will be sold as part of your cell phone plan, so the price is broken up into your 24-month contract. That way people only see an $8 to $10 increase per month.
And as Apple co-founder Steve Wozniak told CNN Money, many people are paying for the brand.
“Apple has cultivated a class of buyers who pay more and expect to pay more for a type of brand prestige,” Wozniak said. “Even techies want to show off that they have the very latest iPhone.”
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But when you get right down to it, the price of the phone could have been a lot more, Soberman explained.
“When you look at the price of technology, it’s been coming down relative to inflation, we have to be honest about that. People are paying less and less for fancier products,” he said.
“So in other words, we’re getting a lot more value per dollar with phones now than we did five years ago. It’s not even close.”