Apple’s iPhone 6 has been a bit hit, selling roughly 10 million units in the first few weeks after launch. But do you really think the new iPhone 6 can be bought for $199? Really?
If you have been watching the new iPhone ads, the $199 does sound encouraging – after all, Apple stated the price was “from $199.” However, that’s not quite the total price; the base price for the new product is actually $649 or more. But stating it that way doesn’t really encourage consumers to go out and buy a new phone.
In reality, upgrading an iPhone every two years using the 24-month service contract will not cost $199. The $199 is a down payment on an iPhone 6 with 16 GB of storage. The down payment rises to $299 for the 64 GB model, and $399 for the 128 GB phone.
The real price ranges from $650 – $920 (depending on carrier) for the 16 GB model, and up to $1,030 for the 128 GB model. Why? Every carrier offers the option to buy or finance by dividing the full price into installments over a two-year period, adding at least $25 to the monthly fee, and sometimes more. To find out, an educated consumer needs to read the fine print and then decide on the value based on the real cost over time.
Group Activities and Discussion Questions:
- Start by showing the new iPhone on apple.com. Make sure to show the price options and ask students their impression of the pricing strategy.
- Divide students into groups. Have each group research how much the phone would cost when buying both (1) outright, and (2) on a monthly payment plan.
- Do this for each of the iPhone carriers: AT&T, Sprint, Verizon, and T-Mobile.
- What other additional charges are there?
- Write the prices on the board and debrief the exercise.
- Pricing chart can be found at http://www.zdnet.com/how-much-does-an-iphone-6-really-cost-hint-its-way-more-than-199-7000033801/
Source: New York Times, ZDNet, Wall Street Journal, other news sources