Lost in the Keynote, Apple Raises Prices on iPhone and Watch
As expected, Apple announced several new products today including a new Watch that packs a lot of technology inside and also three new iPhones, Xs, Xs Max, and Xr. Terrible naming aside, the company is also going to make it hurt a little bit more to buy the latest goods.
Every quarter when Apple reveals its earnings, one of the key metrics analysts look for is the Average Selling Price or ASP. The point of this metric is to make it easier to digest how much the average consumer spends when buying hardware, the higher the number the better.
Being that it is Wall St, if this number is trending upward, your stock price will go up, if it flatlines or goes down, your stock will go down with it. And if you weren’t paying attention closely today, Apple is raising the prices on its mass market iPhone and Watch which will push its ASP higher.
When Apple announced the iPhone Xr, which is widely expected to be the volume leader for Apple as it replaces the iPhone 8, the company said it costs less than an iPhone 8 Plus. What they didn’t say is that it is more expensive than the iPhone 8 and everyone buying the ‘baseline’ iPhone will now be spending at least $50 more per device.
The company is also shipping its less expensive Xr phone a few weeks after the Xs and X Max go on sale; likely trying to temp those who don’t want to wait into buying a phone this month.
The Watch is getting a large price increase as well, the last generation device started at $329 and the new series 4 starts at $399.
Both of these price increases will help Apple push its ASP significantly higher and if these devices sell in volume, history has indicated that this is a strong possibility, then the company should continue to justify its current high valuation as well.
But there is an upper bound on what consumers will pay for an iPhone and as Apple continues to up the price with each generation, there will be a ceiling on how high they can push the limits. The top of the line Xs Max with 512 GB of storage runs $1449.99, a price few will pay but continues to fill Apple’s desire to push its ASP higher.