- Apple is set to launch its most expensive iPhone model yet, the iPhone 8.
- The phone is expected to cost $US1,000 in the US and perhaps £1,000 in the UK for features like an OLED almost edge-to-edge screen, and augmented reality tech.
- But most people in the UK buy phones on contract, and will end up paying more like £1,500 over two years, says one analyst.
Apple is expected to announce three new iPhone models on September 12.
The rumour mill suggests that they will be the iPhone 7s, the iPhone 7s Plus, and a third super-premium phone likely to be called the iPhone 8/Edition/X.
While the iPhone 7s and 7s Plus are expected to be incremental updates on the iPhone 7, released last year, all eyes are on the iPhone 8. The device will probably have an OLED screen that almost runs edge to edge, a camera featuring Apple’s augmented reality technology, and no home button. Nothing’s certain until the official unveiling on September 12, but it’s probably going to be a pretty radical update.
Another aspect that’s pretty radical: the iPhone 8’s price.
Analysts and journalists have floated the “$US1,000 iPhone 8” for several months now, even expecting that the device will cost £1,000 in the UK.
But that isn’t what most people will end up paying for the new iPhone.
The iPhone will only cost you $US1,000 or £1,000 if you buy the device upfront. There’s certainly a small cabal of Apple fans who will do just that, but most people will upgrade to the device through their carrier, along with a very expensive contract.
According to one analyst’s calculation, it might cost you more like £1,500 over a two year contract.
Ben Wood, research lead at CCS Insight, told Business Insider that around two-thirds of the UK still buy their mobile phones on contract. And most people are used to signing up for two-year contracts.
With the pricier iPhone 8, Wood said carriers might recoup their costs by locking people into longer contracts, where they pay something like £40 a month over 36 months, costing £1,440. Or they might stick to pricier short-term contracts, where people pay up to £65 a month across 24 months. That latter option comes to £1,560. There might also be an upfront charge for the device.
“A lot of people will end up buying [the new iPhone] on contract, and the price will be masked,” Wood told Business Insider. “Network operators will bundle larger buckets of data in with that device to make people feel like it’s a good value bundle.”
The truth is, some iPhone owners have already paid around £1,000 for their phones, he added.
If you opt for an iPhone 7 Plus on the carrier Three, you would start with £99 upfront and £37 a month over a 24 month contract. That comes to £939 over two years. “We’re kind of there already,” said Wood. “It’s the psychological barrier of £1,000 that has people excited.”
Has Apple made a huge mistake on pricing?
Wood thinks not, pointing to exciting features like wireless charging and the augmented reality tech. There’s also a lot of people looking to upgrade from older iPhone models like the iPhone 5s or iPhone 6. “There’s huge pent-up demand from people who have waited, but they won’t be iPhone 7 people,” he said.
“Apple are genius at good, better, best,” Wood said, referring to the fact that Apple offers three devices to appeal to different types of consumer. “Of course there’s something shiny at the top. I’m sure we’ll see plenty of people buying it — it’s the ultimate in tech bling. And it will be completely constrained because Apple is good at supply and demand. It will feel like an exclusive product.”
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