iPhone Ultra strategy may work, but could easily backfire on Apple
Could Apple be planning a new iPhone Ultra, costing even more than the Pro Max? That’s the suggestion of a report over the weekend, and it may be backed by a hint dropped by CEO Tim Cook in last week’s earnings call.
Asked about the company’s continued push to drive up the average selling price (ASP), Cook said:
The iPhone has become so integral to people’s lives. It contains their contacts and their health information and their banking information and their smart home and so many different parts of their lives, their payment vehicle and – for many people. And so I think people are willing to really stretch to get the best they can afford in that category…
It had previously been reported that a future Pro Max model might be rebranded as Ultra, in line with the Apple Watch, but Bloomberg’s Mark Gurman suggested an alternative.
Instead of renaming the Pro Max “the Ultra,” Apple could add an even higher-end iPhone above both Pro models. Internally, the company has discussed doing just that — potentially in time for the 2024 iPhone release.
The upward trend in top-tier iPhone pricing
If true, it is understandable why Apple might be considering the move. The company has gradually pushed the price of its flagship iPhone models higher and higher, and all the evidence suggests that the proportion of people opting for one of the Pro models has increased, rather than decreased.
Let’s look at the price of the most expensive iPhone (top tier, max storage) Apple has offered from the iPhone 8 onward:
- iPhone 8 Plus: $949
- iPhone X: $1,149
- iPhone XS Max: $1,449
- iPhone 11 Pro Max: $1,449
- iPhone 12 Pro Max: $1,399
- iPhone 13 Pro Max: $1,599
- iPhone 14 Pro Max: $1,599
There’ve been a couple of pauses, and a single dip, and those are pre-inflation prices – but it’s unarguable that the general trend has been to ever more expensive upper limits.
The fact that Apple continues to push the limits clearly shows that there are enough people out there willing to pay these prices to make it worth Apple’s time to produce these models. Indeed, in the case of the iPhone 14, all the available data points to the Pro and Pro Max models being more popular than the base ones.
The success of the Apple Watch Ultra
Then there’s the Apple Watch Ultra. The Apple Watch Series 8 starts at $399, while the Ultra comes in at literally twice the price.
Again, though, all the available data points to the Ultra have proven a great success.
Apple has demonstrated that, where pricing is concerned, thinking big works.
The small-medium-large tricks
There’s an old sales trick, first made famous with drinks.
If you offer people a choice of two sizes, small and large, a lot of people will choose small. If you add a medium size, most people then choose that – even if it is the same size and price as the old large. The new large is simply intended to make the medium look like a more reasonable choice.
So if Apple makes an Ultra, it may make the Pro Max seem a more reasonable choice, boosting sales of what is currently the top-tier level.
There’s a variation on the small-medium-large technique, known as the decoy trick. With this one, you make the price difference between the medium and the large so small that it seems silly to buy the medium. The classic example is drinks pricing of say $2, $4, and $5 for big jumps in sizes. If you were planning to buy the $4 drink, it’s designed to make you think that it would be silly to do so when, for just a dollar more, you get so much more.
One could argue that Apple is using this trick with the iPhone 14 line-up:
The base model iPhone 14 (small) is $799, while the iPhone 14 Pro (medium) is massively better, and just $200 more, which equates to a rather small difference in monthly outlay. That could well be designed to make it look silly to buy the base model if you can afford the Pro.
Similarly, the iPhone 14 Pro Max (large) offers a significantly larger screen, and better battery life, for only $100 more. For those who don’t hate the size, that could be designed to make it seem silly to buy the Pro, even if you’re buying outright.
So anyone who was thinking of buying the base model may be easily upsold to the Pro. Many who were planning to buy the Pro may easily be upsold to the Pro Max. Apple could well extend this approach to an iPhone Ultra.
But the rumored iPhone Ultra strategy could backfire
I’ve pointed to the $100 price difference between the Pro and Pro Max. I’m sure this has persuaded many to pay the relatively small extra for the larger model.
But … there are those who want the best features, in a more pocketable phone. Some of them already consider the Pro Max too large, more like a small tablet than a large phone. Apple treated them well this year, making the Pro and Pro Max identical feature-wise, but this year we’re expecting the periscope lens to be exclusive to the Pro Max – and Gurman suggests that the Ultra in 2024 could combine better features with an even larger screen size.
Tying features to screen size risks alienating those who want the best spec in a more compact phone. The decoy trick could even end up working in reverse: Instead of making the Ultra look good value, it could instead make the Pro Max look overpriced.
More than this, it could add to suspicions that Apple deliberately withholds features it could easily include in cheaper models simply to force people to buy more expensive ones.
So I do think Apple needs to tread a little carefully here. It may not be the smartest move to introduce a new top-tier model that brings in extra cash, if it alienates those who have historically been Apple’s most profitable customers.
Far more sensible, in my view, would be to keep the feature set and physical size identical, and use case materials and design changes to differentiate a top-tier level.
What’s your view? Assuming an iPhone Ultra has a bigger screen and more features than a Pro Max, should Apple make one? Or has the company already gone far enough? Please take our poll, and share your thoughts in the comments.
Concept image: 4RMD
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