It’s fitting that Apple’s newest and largest iPhone, announced Wednesday, will be called iPhone XS Max. Pushing prices to the max, after all, is the only way Apple is growing iPhone-related sales these days. The new XS Max starts at $1099, making it the most expensive iPhone ever. A 512 GB version of the phone will set you back $1,449. Also fittingly, the new phone will be available in a gold trim.
Apple’s average selling price has gone from $650 last year to an expected $751 in fiscal 2018, according to Visible Alpha consensus data.
There are a few ways to look at the pricing strategy: As my colleague Jack Hough pointed out to me: “That’s still a bargain compared with your $50 electric tooth brush. Think about the time you spend with your phone versus your toothbrush.”
The problem is there’s a shrinking pool of people who want to buy or can afford Apple’s most important product. Unit sales of iPhones are expected to grow just 1% in Apple’s fiscal year ending this month, according to Visible Alpha.
Thanks to the higher prices, total iPhone revenue is still expected to grow 16% this year, to $165 billion.
The strategy is working for investors — Apple is up 37% in the last 12 months — but it’s making Apple’s annual iPhone announcement rather awkward. Apple stock was up 3.1%, to $228.05, by midday on Thursday. The shares had fallen 1.2% on Wednesday, as they often do on product launch days after rising in the days beforehand.
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