Why is the average selling price of iPhone still so high despite record sales?

There is no doubt that Apple is the most profitable smartphone manufacturer. According to the financial report of the last quarter, Apple's revenue in the quarter reached 78.4 billion US dollars, and the iPhone sales reached 78.3 million units, setting a record for single-quarter sales. The key is that Cook did not shy away from saying that the average selling price (ASP) of the iPhone was as high as 694 US dollars, also a record high. In contrast, after ten years of development, the average selling price of Android phones has been reduced by half, from about 440 US dollars to 200 US dollars.

Now the question is, why is Apple able to maintain such a high average selling price for the iPhone?

Let's first talk about what the average selling price is. Take the iPhone as an example. The calculation scope is limited to all iPhone models that are still officially sold on the market, and then the result is obtained by dividing the total revenue of all models by the total sales. Therefore, from the average selling price, it is easy to understand that Apple's total iPhone revenue must be not low, or the models in the iPhone product line are not low.

The average selling price of iPhone in the last quarter was $694, which is a bit unbelievable. Many smartphone manufacturers dream of this. Moreover, if you look at the latest iPhone 7 series, you will know that there is only one relatively low price, that is, the 32GB version of iPhone 7, which is priced at $649, and the other two capacity versions are priced at $749 and $849 respectively. The starting price of iPhone 7 Plus is higher, and the three capacity versions are priced at $769, $869 and $969 respectively, which are all higher than the 6 Plus of the same level last year.

Combined with the average selling price of $694, you might conclude that the entry-level 32GB version is the main sales force, or that the higher capacity and larger version are not popular. This is not entirely true, because Apple is still selling not only the iPhone 7 series, but also the iPhone models that were reduced in price last year, so the average price is definitely not outrageously high.

It should be noted that even if the average selling price of the iPhone is slightly lower, it does not mean that the situation is negative. After all, the iPhone SE released by Apple before only started at $399. Although the average selling price of the iPhone dropped to $595, the total revenue was not greatly affected. This tells us that Apple is not indifferent to the average selling price, but is also interested in making money through cheap iPhones. But now the average selling price has risen, which means that the sales of the iPhone SE that is still on sale are not so optimistic, and most consumers may not choose to buy it.

It's not surprising that iPhone's ASP is high while Android's is low

Compared with the rising average price of iPhone, the average selling price of devices in the Android camp is constantly declining. In fact, it is easy to draw a conclusion that Android buyers are more concerned or interested in lower-priced mobile phones, while iPhone camps are more inclined to buy expensive models. There is a certain reason for this conclusion, mainly because there are too many models to choose from in the Android camp, and some models are priced comparable to iPhones, while others are extremely cheap. If the iPhone has official models on sale for 1,000 yuan and 2,000 yuan, the overall average selling price will be greatly reduced. The iPhone SE is the best example.

In addition, through a simple comparison of average selling prices, we can draw another logical conclusion: the average selling price of the iPhone is higher because the official retail price of the iPhone is higher, and the overall average selling price of the Android camp is lower because the retail price of Android devices is generally much lower.

Apple has long been considered the manufacturer that is best at letting consumers choose products that meet their needs through pricing. Otherwise, if the price difference between models is really huge, buyers interested in iPhone will definitely only choose the cheaper models. However, the high-priced iPhone models are not ridiculously high, otherwise the average selling price of iPhone would have soared to more than $800. In addition, even though Apple has reduced the price of older iPhones, many buyers still choose the iPhone 6 series. There are many people pursuing different price points.

Why do we say that iPhone ASP has increased?

The average selling price of the iPhone has hit a new record. It is possible that most buyers who were not interested in the iPhone 6s last year chose to upgrade this year. The second possibility is that the pricing of this year's iPhone 7 series models is higher than that of the same level last year. The third possibility is that the Plus model is more attractive. But there is a fourth possibility, that is, the relatively cheap iPhone models are no longer so attractive to consumers.

The average selling price of Apple iPhones fell instead of rising in 2013, when Apple introduced a relatively low-priced model, the iPhone 5C. The model still offered a cheaper 8GB version in the second and third years after its launch. The official price of the 5C lowered the average selling price. Now the 5C has been discontinued, but this year there is also an equally cheap iPhone SE, but it did not lower the average selling price of the iPhone. Obviously, the sales of SE are not optimistic. Of course, if the iPhone SE is still on sale next year and the price is reduced, the average selling price of the iPhone may fall again.

After talking about so much nonsense, what I actually want to say is that the average selling price is still an important indicator of performance. This number can relatively objectively reflect which price range of products consumers are most willing to buy. As Cook said, the proportion of iPhone 7 Plus in new product sales exceeds that of previous Plus models. Of course, a low average selling price is not necessarily "adding insult to injury". If the number of units sold is astonishing, just like the sales of devices in the Android camp, a low average selling price is not a bad thing.

The average selling price also clearly reflects the current pricing range of products. For example, the Pixel series smartphones released by Google last year have a higher average selling price than the iPhone, but their sales volume is not as good as the iPhone. The most gratifying thing for Apple at the moment is that the sales volume of the higher-priced models (Plus version) is higher than in the past, and the overall sales volume of iPhone has unexpectedly exceeded that of last year.

In this way, Apple knows very well how to grasp the smartphone market, especially how to launch high-priced models and then let consumers choose to pay for them. As consumers, to be honest, I am not that interested in the record-breaking average selling price of the iPhone. After all, consumers normally think that cheap products are good quality. Therefore, if Apple wants to continue to maintain the sales of high-priced models, it needs to continue to create more useful value for consumers on this model, so that it has no substitute at the same price or relatively cheaper price.

As a winner of Toutiao's Qingyun Plan and Baijiahao's Bai+ Plan, the 2019 Baidu Digital Author of the Year, the Baijiahao's Most Popular Author in the Technology Field, the 2019 Sogou Technology and Culture Author, and the 2021 Baijiahao Quarterly Influential Creator, he has won many awards, including the 2013 Sohu Best Industry Media Person, the 2015 China New Media Entrepreneurship Competition Beijing Third Place, the 2015 Guangmang Experience Award, the 2015 China New Media Entrepreneurship Competition Finals Third Place, and the 2018 Baidu Dynamic Annual Powerful Celebrity.