The iPhone 8 could cost $1,000, but most people won't pay that much up front

IPhone 8 iPhone 10 iPhone X ConceptYouTube/ConceptsiPhoneA mock-up of the soon-to-be announced new high-end iPhone.

The new top-of-the-line iPhone may cost $US1,000 or more, but don’t worry about having to come up with that much money all at once.

Thanks to the wirelss carriers’ instalment plans, you’ll likely be able to pay that amount over the course of a couple years or more, at a cost of less than $US50 a month.

With Apple slated to unveil its latest batch of iPhones next week, the biggest concern about them has been how much the new high-end model, which has been variously referred to as the “iPhone 8” and the “iPhone X,” will cost. Some analysts have suggested it will be much more expensive than current models, potentially with a price tag of as much as $US1,000. On its face, that price would seemingly dissuade many consumers from purchasing the phone.

But most Americans don’t pay the full price of a phone up-front, regardless of how much it costs. Instead, most Americans purchase the iPhone and other smartphones over time via their wireless phone bills. Rather than forking out $US1,000 for the new iPhone when they get it, many Americans will choose to simply have a higher monthly bill that includes a portion of the cost of the phone — potentially making the device much more affordable.

For example, the iPhone 7 Plus, which has a full price of $US770, costs between $US25 to $US36 per month on most plans.

But how much would the carriers charge for a $US1,000 iPhone 8 on a monthly payment plan? Jackdaw Research analyst Jan Dawson used
the recently released $US950 Samsung Note 8 as a guide:

“The recent Samsung Note8 launch gives us something of a sneak peak at how a $US900-$US1,000 phone actually gets priced and sold in the US market. Here’s a sampling of prices from the major US carriers:

  • “AT&T: full retail price: $US949; monthly price: $US31.67 for a 30-month instalment plan with option to trade in after 2 years; $US39.59 to trade in after one year
  • “Sprint: full retail price: $US960; monthly price: normally $US40 but currently $US20 as part of a special offer, for a lease with option to trade in after a year
  • “T-Mobile: full retail price: $US930; monthly price: $US210 up front and $US30 per month over a 24-month term, with an offer to buy one and get one free during preorders
  • “Verizon Wireless: full retail price: $US960; monthly price: $US40 for two years.”

Dawson added: “You’ll see that the real difference in price between a $US770 phone and a $US1,000 phone isn’t $US230 for most customers but a monthly price difference of anything from zero to $US15.”

Will the carriers offer iPhone 8 deals?

But there are other factors that could affect the price consumers pay for the new iPhone. Carriers often compete with each other by offering attractive trade-in offers, discounted monthly payment plans, and buy-one-get-one offers on new, high-profile devices, like the iPhone 8. Carriers figure that when consumers buy a new iPhone, they might also be open to switching wireless providers, so it’s a good time to offer deals.

Indeed, some analysts have predicted that carriers are gearing up to offer “assertive promotions” to coincide with the new iPhone’s launch.

But not everyone agrees. The big carriers might not strongly discount the new iPhone, BTIG analyst Walter Piecyk wrote in research note on Thursday. The carriers are in pretty good shape, so they don’t need to boost their subscriber numbers by using discounts to lure customers from their rivals. Churn rates — which measures the pace of customer defections — are low, while profits are high.

And the carriers haven’t felt pressure to respond when one of their rivals offers a big new discount, Piecyk said. When Sprint launched a promotion earlier this year that offered a free year of service, it only signed up 13,000 new customers, even though its big rivals didn’t match or respond to the deal, he noted.

“It might be tough for wireless operators to top the generous iPhone offers from last year,” he wrote. “The competition among US operators is simply not as fierce as many of our peers seem to believe, but phone upgrades of existing customers could still play a role in delivering growth in smartphone sales.”

So instead of giving a discount on the iPhone 8, or whatever it ends up being called, carriers could offer other, potentially less costly promotions, like T-Mobile’s recent move to bundle free Netflix with family plans. Barclays analysts recently suggested that Apple could bundle a free year of Apple Music or iCloud storage with the iPhone 8.


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