iPhone 8 pricing: How high can Apple go?

AirPods charging case with Lunies leather keychain case
AirPods charging case with Lunies leather keychain case

John Gruber has a great post up on Daring Fireball summing up a lot of the thinking that's been buzzing around about the next-generation iPhone since it was first rumored over two-and-a-half years ago. Namely that, like with the MacBook in 2015, if Apple wants to seriously push the boundaries of new technologies, the company has to do it in a device that's both more expensive and, thus, more niche. It's the only way to balance the higher production costs and lower yield rates with what would otherwise be much higher demand.

In other words, it's the strategy Apple uses to bring tomorrow's products to market today — and test upper price elasticity at the same time. (iPhone 7 Plus showed we'll spend $20 more for a much better camera, so much more will we spend for a much better camera, display, sensors, and charging options?)

What John also does, and does well, is stick a number on that price point. Some previous rumors had pegged the starting price at anywhere between $869 ($100 more than the current Plus model) and $999. John thinks it could be higher.

Let's take a serious look at this. $1,500 as a starting price is probably way too high. But I think $1,200 is quite likely as the starting price, with the high-end model at $1,300 or $1,400.

John thought similarly about the old, gold, Apple Watch Edition and he was right. There's a difference between Apple Watch, and iPhone, though.

Apple Watch has identical features between models but different levels of material. You can get in with aluminum and ion-exchange glass for a few hundred dollars. If you want stainless steel and sapphire crystal — or ceramics or a Hermès band — you'll pay anywhere from a few hundred to a thousand more.

I used MacBook as an example before but that's not right either. MacBook offered less for more. All that display and battery tech was in service of making a thinner, lighter experience. The rumors about the next-generation iPhone are about making a more futuristic one.

MacBook Pro almost fits. It has more features for more money. But a lot of those features revolve around power and performance — faster processor and more powerful graphics, for example. I haven't seen any rumors to suggest the next-generation iPhone will have a better A-series system-on-a-chip than the iPhone 7s or iPhone 7s Plus that launch roughly alongside it.

The next-generation iPhone – iPhone 8 for convenience until Apple marketing reveals a name for it — seems like it will be entirely differentiated by feature set. Namely, the aforementioned edge-to-edge, OLED display, proximity charging, and a facial identity sensor.

And it's as good a differentiator as any. Rather, it's as understandable a differentiator as material or power, both of which have already been accepted by the market.

Apple previously tested downward elasticity with an even more mass-market iPhone — iPhone 5c. It was plastic and pop-culture and meant to sit on shelves, enticingly, like an iPod. It managed the sitting part, but not much else. In hindsight, it wasn't the right approach for Apple's brand, at least back then.

There were also rumors preceding its launch that the original iPad would cost upwards of $1000 and it ultimately started at $500. Sometimes there's expectational credit rather than expectational dept.

Even if the higher price point is anywhere in the ballbark, it remains to be seen how successful an even more premium iPhone will be — not in terms of revenue, since it will be constrained by design — but in terms of moving the overall product forward.

My guess is that it'll play out much like the gold iPhone and AirPods did: With a lot of sensational naysaying and even mockery from the usual suspects, followed quickly by complaints they can't get it after launch.

Even at $999, $1,999, or more.

Rene Ritchie

Rene Ritchie is one of the most respected Apple analysts in the business, reaching a combined audience of over 40 million readers a month. His YouTube channel, Vector, has over 90 thousand subscribers and 14 million views and his podcasts, including Debug, have been downloaded over 20 million times. He also regularly co-hosts MacBreak Weekly for the TWiT network and co-hosted CES Live! and Talk Mobile. Based in Montreal, Rene is a former director of product marketing, web developer, and graphic designer. He's authored several books and appeared on numerous television and radio segments to discuss Apple and the technology industry. When not working, he likes to cook, grapple, and spend time with his friends and family.