Purchasing Mobile Phones - Should Vendors halve their prices, to entice users to purchase a new phone every year.

salmon90 on 31/07/2018 - 18:50
Last edited 31/07/2018 - 19:11 by 1 other user

Would phone makers make more money by decreasing prices to make it more affordable for people to upgrade their phones every 12 months.

Lets call the Iphone X $1500. I would imagine the majourity of users would want, expect and wait to get 2 years use out of the phone.

BUT if they charged $800 for Iphone X, then 1 year later offered the Iphone 11 for $800… Over 2 years, Apple earns more money on average per user, and customers get the latest phone for only $100 extra.

This can obviously be "consumer choice" and there is a risk that users will just buy the $800 phone and wait for it to last 2 years. Or could it be a special dial where they lock you in?

What would you choose?

Poll Options

  • 1
    $1500 per year for the latest phone. Total $3000/2years
  • 2
    $1500 and use it for 2 years. Total $1500/2years
  • 2
    $800 per year, but get a new phone every year. Total $1600/2years
  • 13
    $800 and use it for 2 years. Total $800/2years
Mobile

Comments

  • whooah1979 on 31/07/2018 - 18:53
    +1

    if they charged $800 for Iphone X

    Apple isn’t going to double their sales because they half their price. Their new price may give consumers the impression that their items aren’t as premium as Samsung. This may lead to a reduction in market share.

  • bobbified on 31/07/2018 - 18:54
    +2

    Why? The companies are there to make money. There's no reason to reduce the price since people are willing to pay full price!

    If they halved the price, they'd need to sell about at least three times as many handsets to make the same amount of money as they would had they not reduced it.

  • dylo on 31/07/2018 - 18:54
    +7

    Yes OP. Everything should be half price.

  • Ughhh on 31/07/2018 - 18:56
    +5

    There's a lot of people who chase new things and want to be in the 'popular' group. Getting the new iPhone every year when it's released, even if it has the same specs or even if they don't actually need to. Their mindset is probably the opposite of the people who visit Ozbargain. I think big brands know that if people are willing to camp out side the store overnight to get their product, there's no reason for them to decrease the price. If anything, increase the price.

  • QW3RTY on 31/07/2018 - 19:04

    Apple has people lining up for nights in advance, winding around city streets to have the opportunity to buy a new $1,500 phone every year.
    I'm sure there's a (smaller) group that purchase flagship phones upon their release for Samsung as well.

    As others have said, it's a compulsion to satisfy their status of owning the latest iPhone. It's safe to say these people are not price-sensitive.

    In addition to the flagship iPhone X, Apple also offer more cost effective models for their more price-sensitive consumers, so they're not turning anybody's business away. I think they've found a fairly efficient model (efficient in lining their pockets).

    Also, your scenario assumes that all iPhone X users would buy a new phone every year — which they would likely not.

  • scrimshaw on 31/07/2018 - 19:05

    Apple uses their brand image and marketing to make you want to buy a new phone every year. They don't need to decrease prices when they can invoke feelings of jealousy and envy in people who are using outdated devices and they continue to have early adopters who seek to own the newest devices.

    And for the laggards: they have to eventually upgrade because iPhone batteries aren't easily removable…

    I don't know what the stats are, but I'm pretty certain that most people are not annual upgraders. We're keeping phones for longer nowadays because the performance enhancements of each new generation is getting less and less noticeable.

  • hikaru78 on 31/07/2018 - 19:09

    can we halve the price on cars too???

    how bout houses??

    • tonsta on 01/08/2018 - 00:04

      give it 3 years.. sydney down 15% in some metro areas.

  • Halo375 on 31/07/2018 - 19:11
    +4

    Where’s the option for none of the above?

  • Ocker on 31/07/2018 - 19:14
    +1

    I think it is fair to assume the phone makers have done all their sums to arrive at the best revenue sales process

  • Godric on 31/07/2018 - 19:32
    +4

    Why not give them out for free

  • trustnoone on 31/07/2018 - 19:54

    I totally see where your thinking is at, but it makes a few assumptions which unfortunately I'm not sure is true, truth be told apples main goal is that they sell their phone at full RRP AND you buy a new one every year.

    End of the day though someone buying a new phone may do so based on: price, features, functionality, market trend, current phone, peer and social pressures, mobile plans available, job market, personal opinion on brand, etc.

    The reality is price is typically a part of the whole puzzle on top of many others, so unfortunately its impossible to assume that people would buy yearly if the cost of the phone is lower. If an iphone changed its RRP to $500 right now I still wouldn't buy one since I'm not a huge fan of apple.

    I also think it go's against most business ideals which is to hopefully sell you at full price as often as possible (which a lot of people actually do as well). To be honest with you I wouldn't be surprised (though I'd love to see it) if Apple underwent an analysis on their audience to figure out appropriate pricing and marketing trends for the future to get the most $$$.

  • mbck on 31/07/2018 - 20:31
    +2

    More rubbish and bad for the earth.

  • Hazzard on 31/07/2018 - 21:31
    +2

    I think you are looking at it wrong. Let's assume the parts and selling costs per unit of iPhone X are $600.

    Scenario 1 - 1 phone every 2yrs for $1500. Total selling price of $1500. Total cost of $600. Profit of $900.
    Scenario 2 - 1 phone every yr for $800 each. Total selling price of $1600. Total cost of $1200. Profit of $400.

    In short, apple is better off selling you one phone at a higher price every two years compared to a cheaper phone every year.

    The other thing is the first case gives apple the full profit at the start of the 2 yrs.

  • blitz on 31/07/2018 - 22:09

    Congratulations, you have discovered the field of Economics. 8)

  • HighAndDry on 01/08/2018 - 13:09

    Apple is a big company that makes a lot of money. They have whole teams in marketing and revenue forecasting working on this exact question. So no - whatever you can come up with probably won't make Apple more money, because if it did, Apple would already be doing it.

  • Illian on 01/08/2018 - 16:02

    No, it wouldn't work, simply because most people wouldn't want a new phone every damn year in the first place. It would be dumb as hell to get a new phone every year, just setting up a new phone every two years is bad enough already imo! And differences year to year are almost nothing compared to differences every two years, the improvement actually wows you after two years.

  • Strahany on 01/08/2018 - 19:48

    In the case of Apple phones, I'm able to sell mine after 12 months for approximately 65% of its initial purchase price, which then goes towards the new phone. Can't say the same for Samsung phones, unfortunately, as the resale market simply isn't there like it is for Apple devices.

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