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Product Pricing and iPhones

Let’s talk about the price of iPhones…

…and why what you charge for your product or service shouldn’t solely be driven by what it takes to make it.

Here are the prices of various iPhones (base model) over a 10 year period:

2007: $599 (iPhone 1)

2007: $499 (iPhone 1)

2008: $199 (iPhone 3G)

2012: $199 (iPhone 4)

2014: $649 (iPhone 6)

2017: $999 (iPhone X)

Why? Did production costs start high, decrease, then skyrocket? Nope. If anything, per unit production costs likely declined over the last decade.

The reason: price is not an absolute value. It isn’t just simple economics. It’s a perceived value considering context, brand, alternatives, availability, ease, and the consumer’s budget.

The price in 2007 was exclusive. It created a special club of tech-savvy early adopters. The price in 2008 allowed the company to reach many, many people who were price sensitive and didn’t know Apple’s brand. And prices today represent a very well established brand perception of Apple’s quality, security, feature-richness, and style.

Brilliant marketing. Brilliant strategy.

And Apple’s global smartphone market share has grown from to 3% in 2007 to 30.44% today.

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