Is the New iPhone worth the $1,000 Price Tag?

To everyone’s amazement, or possibly even dismay, the newest Apple iPhone is likely to debut at a price of $1,000 or more. So why are the newest iPhone models costing over $300 more than their predecessors? Many would believe that the main reason is additional features, and although that is partially true, that is not the driving reason for such a hyper inflated price. The main reason is that within the past few years, U.S. wireless carriers have discontinued subsidies that made smart phones like the Apple iPhone more affordable to consumers. With the subsidies eliminated, consumers are much less likely to upgrade to the newest model phone every two years, and are becoming more likely to hold on to their existing phones. With the prices of new smart phones climbing so high, businesses like Apple and Samsung may find it increasingly more difficult to generate revenue through the sale of new smartphones.

On September 12, Apple officially announced their newest iPhone, the iPhone 8, that is set to be released later this month. Even the Samsung Galaxy 8, which released back in April, has a price tag around the same $1,000 mark as the new iPhone 8. With such high prices, consumers are finding it more difficult to rationalize the cost of a $1,000 phone, especially when their current model is completely serviceable. To counteract the growing trend of sticking with older devices, wireless phone companies like Verizon and T Mobile are using promotions to lure customers into purchasing newer models of phones. For example, Verizon is offering customers a free tablet with the purchase of certain smart phones, while T Mobile is offering to pay for customers Netflix accounts if they have two or more phones on an unlimited data plan. Of course, neither of these plans match the value of the extra $300 consumers will be paying for a new iPhone 8 or Samsung Galaxy 8, but Verizon and T Mobile hope that these deals will convince customers to upgrade their phones.

Consumers on the other hand are privy to these company’s tricks, and are not eager to buy new phones. For most consumers, it is hard to rationalize a $1,000 price tag. $1,000 for many people is a single paycheck, or maybe even more than a single paycheck! Consumers must also rationalize their buying power, and are choosing between either spending $1,000 on more practical things like a few weeks’ worth of groceries, their mortgage, their car payment, maybe even their kid’s dance lessons, or forego all those things to buy a new smartphone. Companies have also begun to allow financing for the purchase of new smartphones, which has helped considerably, but still does not completely justify the problem of rising costs. As it stands now, the price of new smartphones has risen to the point where it has crossed a psychological threshold for many consumers. Consumers are finding it increasingly more difficult to rationalize the expense, and sales of new smartphones are likely to fall drastically.

Within the past few years, U.S. wireless carriers have discontinued subsidies that made smart phones like the Apple iPhone more affordable to consumers. With the subsidies eliminated, consumers are much less likely to upgrade to the newest model phone every two years, and are becoming more likely to hold on to their existing phones. Companies like Verizon and T Mobile are actively trying to lure in new smart phone sales by offering customers promotions and financing, but many consumers still find it hard to rationalize the increasing costs. With the prices of new smart phones climbing so high, businesses like Apple and Samsung may find it increasingly more difficult to generate revenue through the sale of new smartphones.

Would you buy the new iPhone? Let us know here!

 -Isaiah Owens

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