According to a recent report by Bloomberg, Apple is planning to increase the price of its upcoming iPhone 15 Pro and Pro Max models in order to boost revenue during a projected slump in smartphone sales. The publication reveals that Apple aims to produce around 85 million units of the iPhone 15 this year, which is slightly less than the 90 million units of the iPhone 14 it requested from its suppliers last year. Despite lower demand for consumer tech and ongoing inflation, Apple hopes to maintain high revenue by raising the price of its more expensive iPhone models.
The decision to raise prices comes in response to falling demand in the smartphone market, which reportedly led Apple to cut iPhone 14 production by 6 million units last year. The company is also facing production issues with the display panels for the iPhone 15 Pro and Pro Max, which could impact the number of units available at launch. Additionally, Apple scrapped plans to increase iPhone 14 production by an additional 6 million units last year after the expected surge in holiday season demand did not materialize. A report by IDC predicts a decline of 3.2 percent in global smartphone shipments in 2023, with the market expected to start recovering next year.
The starting price of iPhone Pro and Pro Max models has been $999 and $1,099, respectively, since the introduction of the iPhone 11 Pro in 2019. Although there is no specific information about the price increase, it is speculated that the standard iPhone 15 and iPhone 15 Plus models will maintain their previous generational pricing at $799 and $899, respectively.
While Apple aims to increase revenue through higher-priced models, it still needs to sell the iPhones it produces. However, the company appears confident that a price hike will not deter customers from purchasing its flagship offerings. Apple CEO Tim Cook expressed this confidence during an earnings call in February, stating, “I think people are willing to really stretch to get the best they can afford in that category.”
Overall, Apple’s decision to raise the price of its top-tier iPhone models is a strategic move aimed at offsetting any potential revenue loss due to a decline in smartphone sales. By targeting higher margins with its premium devices, Apple hopes to maintain a strong financial position and adapt to changing market dynamics. However, challenges such as production issues and market uncertainties will require careful management and execution of its pricing strategy.
