With the expectation of Apple’s iPhone 8 release coming later this year, the price is expected to hit above $1,000. This is a game changer for the smartphone as previously phones has never surpassed the 1k mark. So how is Apple getting people to pay that outrageous amount of money for a phone?
Barclays has stated that they believe the tech monopoly can overcome buyer’s shock at the price, by adding in year-long subscriptions to some of Apple’s popular online services such as Music and iCloud storage.
A survey done by Barclays has shown that the willingness people have to buy the phone drops from 36% to 18% when the price of the phone goes from $800 to the $1,000 mark.
The same survey found that when they add one-year subscriptions, Apple has the potential to sell up to 64 million devices, up from 40 million without the subscriptions. The profits from this could reach upwards of $1.3 billion.
Barclays analyst, Mark Moskowits stated that “considering consumers’ sensitivity to the price gap, we explore how Apple could offer purchasers of iPhone 8 a free subscription bundle of 1-year of Apple Music and 1-year of 200GB iCloud storage.”
While this may seem gimmicky to some, it appears to be working. Apple shares have gone up over 41% this year alone and hit a new trading high last Thursday, August 24th. As of the end of August, the shares were up 0.3% trading at $163.99.
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There was a great deal of panic that consumers would not be happy at the $1,000 price tag. These fears were somewhat unfounded as past Apple products have all sold notoriously well regardless of price.
Given the options that the phone has and the exclusivity perceived when buying the phone, it seems likely that the product will do well in the market.