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iPhone X Pricing & Substitutes: Why Four Digits Matter

iphone x pricing

To the surprise of many, the iPhone X exceeded the $1,000 price tag. Not only is that well above competing models from Samsung, it also puts the iPhone X in a completely different league of products -- the iPhone 7 launch price in the US was $649, which means that the iPhone X is priced 72% higher than the previous iPhone 7 model. This is interesting for a number of reasons. For one, it really puts Apple’s brand to a test. The people that will buy an iPhone X will probably be inquisitive about the specifications of the phone, as they’re not just buying it for the brand. If they wanted just the brand, then an iPhone 8 would be much greater value.
Secondly, the price tag alone means that the potential iPhone X customer will be facing completely different substitutes. Rather than comparing the iPhone X to a Samsung Galaxy or Google Pixel, customers may start considering whether to invest in a great computer or the iPhone X. 

iPhone X does indeed have a lot of high-tech features, but this changes the marketing around the iPhone X quite substantially. With previous models, the brand of the iPhone was highly emotional and design was key, and the consistent delivery of this through both product, marketing and distribution have turned Apple into what it is today. While design and emotions are still important for the iPhone X, these things alone won’t justify the new price tag. The value proposition that Apple brings to customers needs to focus more on features, and appeal to the tech-savvy audience that will pay this amount of money.


Driving Up Willingness to Pay

The price for the iPhone X is on the verge of what most customers would accept, which is just where you want to be. You want to be where most customers would hesitate, but still buy:

willingness to pay.png

Identifying this willingness to pay can be done through pricing research, and the curves that are produced from this will look something along the lines of those in the image above. The curves will help you identify profit-maximizing price points, and perhaps even more importantly, carrying out pricing research will give you an idea of what drives willingness to pay, i.e. what features and attributes matter to customers so much that they're willing to pay a higher price for it.