See how Apple's iPhone reached a new record high ASP of $695

AppleInsider

The iPhone's record-setting average selling price (ASP) achieved last quarter continues an upward trend in iPhone pricing, led by growing popularity for Apple's premium-priced, more-fully-featured "Plus" models.

The ASP is a benchmark of how much customers are willing to spend acquiring an iPhone from Apple or their carrier. The figure is worked out by dividing the total revenue Apple received for the product by the number of units sold to customers, with the number changing each quarter depending on consumer trends.

According to Apple's quarterly financial results for the last five years, the ASP of iPhones ranged between the recently-achieved peak of $695 and a low of $561 in Q3 2014. Typically, the price stays above $600.

Over the course of the last three years, the ASP peaked in the first quarter results -- not coincidentally when new iPhone models launched -- hitting $646, $687, and $691 in Q1 2014, 2015, and 2016 respectively.

Between peak ASP levels, the average price drops down slightly towards the middle of the year, with an $85 swing by the third quarter of 2014, $95 in 2016, before climbing back up by the end of the year. In 2015, the price dipped by just $28 during the summer, with a 35 percent year-on-year iPhone revenue increase helping Apple post its highest ever June quarter earnings.

The pattern of high ASP late in the year is attributable to a number of factors. It is the quarter that follows after Apple's traditional September refresh of the iPhone, and it is likely customers are willing to pay for a more expensive, higher-specification device shortly after the smartphone's launch.

The holiday shopping season is another driver for hardware sales, and pressure to provide a great gift to a loved one may help push buyers to go for the more costly options.

During Tuesday's results call, it was noted the latest ASP peak was driven by sales of the iPhone 7 Plus, with the premium device having a stronger demand than previous 5.5-inch-sized handsets. Apple Chief Executive Tim Cook noted the iPhone 7 Plus enjoyed a "higher proportion of new product mix than we've ever seen with Plus models in the past."

While there is a noticeable pattern when looking at iPhone sales and the iPhone ASP, the same cannot be said about figures for some of Apple's other products. Similar data for iPad sales doesn't appear to show a pattern, with the average selling price dropping from its height of $614 in the first quarter of 2013 down to sub-$475 levels, though with a brief peak in 2016's third quarter bringing it back up to $490.

As with the iPad, there doesn't appear to be any correlation at all between the ASP of Macs and the number of units sold. Apple tends to refresh its MacBooks and iMac ranges in two periods, covering spring and fall, but aside from a pattern of higher Mac unit sales during the fourth and first quarters, the ASP is seemingly uninfluenced by these product launches.

thedba

Apple absolutely needs to cut prices on iPhones in order to gain marketshare from Android. 


NOT!!!!

hentaiboy

I wonder how much of this is due to punters having to purchase higher capacity models due to bloat ware?

mtbnut

"We were hoping for an even $700 ASP, so we need to downgrade AAPL stock due to this inability to provide with a nice round even number." 

gmgravytrain

All last year the analysts were claiming the iPhone's ASP would drop. So, are they crooks or are they just tremendously stupid. I'm beginning to think they're both. They affirmatively tell potential investors these sort of things and all they're doing is making naive investors lose money or miss a chance of making some by steering them away from buying Apple. I'm willing to bet those same analysts are going to say the same thing this year about how the Chinese smartphone manufacturers are going to destroy Apple's iPhone business. If they don't know these things for certain, they shouldn't be spouting this endless rhetoric about Apple's future being doomed. It's just sickening to have to listen to. They're happily telling people to buy Under Armour and GoPro but telling them to stay away from Apple

Sure, there are plenty of companies to make money from but analysts should tell investors to invest in those companies and leave Apple out of it. When analysts tell investors to avoid buying Apple stock and they're so far wrong, there's just something crooked about it. It's as though they're not paying any attention to company fundamentals, at all.

wonkothesane

Really interesting that they can maintain the upward trend on ASP. It would appear that the iPhone has not lost any of its mojo, and is an exception to this account. Even within Apple's product range. So, most successful consumer product of all time? 
Yes, rhetorical question I suppose.

randominternetperson

The $695 ASP is a staggering number.  The second most expensive phone in the lineup (the base model iPhone 7 with 32 gig--which is an awesome phone) costs $50 less than the AVERAGE selling price for all iPhones?  I believe the figure is true, but it seems almost impossible--especially since only a small fraction of the iPhones of my friends or people I see in the city are the 7+ (or 6+) models.  Perhaps part of the answer is that overseas iPhones are significantly more expensive than the US?

carnegie

randominternetperson said:

The $695 ASP is a staggering number.  The second most expensive phone in the lineup (the base model iPhone 7 with 32 gig--which is an awesome phone) costs $50 less than the AVERAGE selling price for all iPhones?  I believe the figure is true, but it seems almost impossible--especially since only a small fraction of the iPhones of my friends or people I see in the city are the 7+ (or 6+) models.  Perhaps part of the answer is that overseas iPhones are significantly more expensive than the US?

You have to take into account the larger storage models. The iPhone 7 32GB is $649, but there's also the 128 GB model for $749 and the 256 GB model for $849. Then there's the iPhone 7 Plus range from $769 to $969. So that's 5 models at $749 or above.

Cutting the other way (i.e. making the $695 ASP seem high): That ASP isn't the average retail price paid for iPhones, it's the average that Apple got paid for iPhones. Apple sells a lot of iPhones itself, but a lot are also sold through third-parties. According to Apple's last annual report, around 25% of its net sales go through its own channels (including its online and retail stores). What's the breakdown for iPhones? I don't know, but the 25% gives you an idea to start from.

Also, part of the revenue that Apple gets from iPhones is deferred to account for Apple's ongoing obligations relating to those iPhones, e.g. future software updates. So there's always a portion of current sales that isn't getting counted and a portion of past sales that is. In quarters where Apple has especially high iPhone revenues, the net effect would tend to be a lower ASP than Apple actually got. That's because a larger amount of revenue would be deferred out of the current quarter (based on current sales) than would be realized in the current quarter (from previously deferred revenue based on older sales).

The_Martini_Cat

Larger capacity 128 and 256 in the product mix means a longer time between replacements.  It makes sense to get the largest one & it's all gravy for Apple.  But then you keep it another year & feel virtuous.  I mean, do i need 256 when I have a 64 that has plenty of room?  No, I should get a 128.  But ... what if I get into movies?  Higher ASP is the result.  It's not magic, but people are still trying to future proof.

stardustag

sog35 said:

randominternetperson said:

The $695 ASP is a staggering number.  The second most expensive phone in the lineup (the base model iPhone 7 with 32 gig--which is an awesome phone) costs $50 less than the AVERAGE selling price for all iPhones?  I believe the figure is true, but it seems almost impossible--especially since only a small fraction of the iPhones of my friends or people I see in the city are the 7+ (or 6+) models.  Perhaps part of the answer is that overseas iPhones are significantly more expensive than the US?

Apple sold  crap load of 7+ this holiday. A crap load

Yep, and my $969 7+ is subsidizing (i.e. pulling the ASP up) a lot of those medium capacity 7s Apple sold.

mac_128

stardustag said:

sog35 said:

randominternetperson said:

The $695 ASP is a staggering number.  The second most expensive phone in the lineup (the base model iPhone 7 with 32 gig--which is an awesome phone) costs $50 less than the AVERAGE selling price for all iPhones?  I believe the figure is true, but it seems almost impossible--especially since only a small fraction of the iPhones of my friends or people I see in the city are the 7+ (or 6+) models.  Perhaps part of the answer is that overseas iPhones are significantly more expensive than the US?

Apple sold  crap load of 7+ this holiday. A crap load

Yep, and my $969 7+ is subsidizing (i.e. pulling the ASP up) a lot of those medium capacity 7s Apple sold.

Yes, and guess how much higher end 6s & 6s Plus sell for?

Yup, that's right $749 for the top of the line 6s Plus, and $649 for the top of the line 6. Even sales of the 64GB SE help push up the average selling price. 

This exercise gets tedious. Yes Apple could have sold nothing but iPhone 7s but then the ASP would have been much higher. But it could also just as easily be that maxed out 6s phones could have sold as much or more than the 7. Who knows? Until Apple breaks out each model, it's impossible. It's ridiculous to debate it.

k2kw

I think a lot of this is the dual Camera's on the iPhone.

I wonder how much of a hit Canon, Nikon, Pentax, took a hit and will continue to take a hit.

randominternetperson

mac_128 said:

stardustag said:

sog35 said:

randominternetperson said:

The $695 ASP is a staggering number.  The second most expensive phone in the lineup (the base model iPhone 7 with 32 gig--which is an awesome phone) costs $50 less than the AVERAGE selling price for all iPhones?  I believe the figure is true, but it seems almost impossible--especially since only a small fraction of the iPhones of my friends or people I see in the city are the 7+ (or 6+) models.  Perhaps part of the answer is that overseas iPhones are significantly more expensive than the US?

Apple sold  crap load of 7+ this holiday. A crap load

Yep, and my $969 7+ is subsidizing (i.e. pulling the ASP up) a lot of those medium capacity 7s Apple sold.

Yes, and guess how much higher end 6s & 6s Plus sell for?

Yup, that's right $749 for the top of the line 6s Plus, and $649 for the top of the line 6. Even sales of the 64GB SE help push up the average selling price. 

This exercise gets tedious. Yes Apple could have sold nothing but iPhone 7s but then the ASP would have been much higher. But it could also just as easily be that maxed out 6s phones could have sold as much or more than the 7. Who knows? Until Apple breaks out each model, it's impossible. It's ridiculous to debate it.

I don't think we're "debating it."  I think we're just thinking it through.  Can anyone imagine what the reaction would have been if 10 years ago Apple had asserted that average selling price for one of their phones would be just under $700?  For a PHONE?  And that they would sell tens of millions of them?  Everyone would have blamed that on the reality distortion field.

And, by the way, selling a 64GB SE can't help "push up" the ASP when it sells for $250 less than the average.  Every sale of an SE or a 6 lowers the ASP.  I'm not saying that's a bad thing, or that Apple regrets those sales, but mathematically they lower the ASP, period.

randominternetperson

k2kw said:

I think a lot of this is the dual Camera's on the iPhone.

I wonder how much of a hit Canon, Nikon, Pentax, took a hit and will continue to take a hit.

Good point.  My wife now looks a bit less lovingly at her 7 since she learned that Portrait Mode is only available on the 7 Plus.

bestkeptsecret

randominternetperson said:

k2kw said:

I think a lot of this is the dual Camera's on the iPhone.

I wonder how much of a hit Canon, Nikon, Pentax, took a hit and will continue to take a hit.

Good point.  My wife now looks a bit less lovingly at her 7 since she learned that Portrait Mode is only available on the 7 Plus.

That's tearing my wife too. She loves the cameras on my 7 Plus, but doesn't like the size and is loth to settle for the camera on the 7!