Apple’s iPhone is expensive, but only expensive relative to less expensive smartphones on the market. When compared to similarly premium smartphones– Samsung Galaxy Note 9, I’m looking at you– the new iPhone Xs line appears to be priced about the same and with similar features.
I can argue that Samsung Galaxy-whatever models, even if priced less than a similar iPhone model, actually cost more to own. Numbers don’t lie, but numbers make up the old saying “lies, damned lies, and statistics.”
Apple charges a notable premium for every model in the iPhone line, starting at the top with iPhone Xs Max which can weigh in at $1,449 for 512GB of storage. Chip and Joanna Gaines talk about buying the least expensive home in the most expensive neighborhood. Why? It should be obvious that luxury does not sell as well as almost luxury.
Likewise, Apple won’t sell as many of the 512GB iPhone Xs Max as the less expensive Xs or Xr models with less storage. What those iPhones and iPhones from last year and years before bring to the table is what you will not find with competitors.
So, let’s say you bought last year’s iPhone X for $1,149 and you keep it for two years. That’s the price. When you sell the iPhone for, say, $600, then the actual cost of ownership– not including cellphone carrier costs, applications purchased, or any repairs needed out of warranty– is $549.
Would you buy an iPhone Xr with 128GB of storage for $400? It would be a bargain, right? That mid-range Xr retails for $799 but could be worth half that in just a few years.
As an example of what happens to a product’s value, consider what you can find on Gazelle, a website which buys and sells used products. Last year’s Galaxy S8 model is worth $100. Last year’s iPhone X is worth $490 at wholesale (sell to Gazelle) and retails (buy from Gazelle) for $779.
Therein lies a perfect example of iPhone X’s real price vs. cost. Apple’s products may have premium price tags, but after reducing the purchase price by the retail price of a product that is a few years old, that original price differential can be eliminated.
You will see a similar price vs. cost issue with automobiles and other products. Here’s the basic rule– buy the least expensive of the most expensive product line and get the highest resale value relative to the initial price.
Price is not cost.