An Apple hardware subscription service, in which customers can own an iPhone or other device by paying a monthly fee instead of upfront, was recently rumoured to be under development. Earlier this week, Bloomberg’s Mark Gurman hinted that this iPhone subscription would cost more than the monthly instalment. He now claims to have a better understanding of how this Apple subscription would work and, more importantly, the subscription’s prices. On a subscription plan, you’ll pay more for an iPhone than you would pay upfront.
Subscription plans for new Apple products are available for 12, 24, and 36 months, according to Gurman. There is a chance that it is either an iPhone, iPad, or MacBook. He used the iPhone 13 as an example to show how the subscription costs would be calculated. A monthly subscription for Apple’s iPhone 13 will cost $35 more than the $799, $999, and $1,099 suggested by Gurman’s list prices in the United States for the iPhone 13 and iPhone 13 Pro, respectively. Apple’s new iPhone upgrade program “undercuts the pricing of the old iPhone upgrade program by a few dollars,” Gurman explained.
The iPhone 13 would cost $1,260 instead of $799, the iPhone 13 Pro $1,620 instead of $999, and the iPhone 13 Pro Max $1,800 instead of $1,099 if a user subscribes to an iPhone service for the maximum period of 36 months—3 years. According to Gurman, this is “back of the envelope math” for the iPhone subscription program, but these pricing options are very real.
Customers would benefit more from a contract with a shorter term than from long-term subscriptions because the latter generate more revenue per unit. For example, if you pay $35 per month for 12 months, you’ll pay $420, which is less than half of the upfront cost for an iPhone 13. And since Gurman previously stated that the subscription would not just be the total cost of the iPhone divided over a few months, but a package that may include software services, customers may gain additional benefits.
Apple One already provides access to a variety of bundled services from Apple. A single, low-cost monthly fee gives you access to all of these services, as well as iCloud and the Apple Music streaming service. Subscriptions for Apple’s hardware products may include such packages, even if they do not include AppleCare plans, to entice customers who would otherwise be able to purchase a new iPhone using one of the company’s other payment options. There are many programmes, such as Apple’s iPhone Upgrade, which lets customers pay a monthly fee for an iPhone and then own it after a two-year term.
Apple’s subscription plans may be attractive to consumers in developing countries like India, where prices are high. To avoid paying a large sum of money all at once, many customers choose to finance their purchase of a new iPhone through a third party. Flipkart, for example, runs the Smart Upgrade Plan for select smartphone brands in India, which allows buyers to own new phones at a lower cost than the original and replace them with newer models when the term expires.