Will iPhone Subscription Model Make More Money For Apple? Here’s What This Report Estimates
Apple was recently rumoured to be working on a subscription model for its products. The Cupertino-based giant is said to offer iPhones and other Apple products on a monthly subscription model that will let users pay a monthly fee to get their hands on the latest iPhone model every year. A report has now estimated how much money Apple can possibly make with its subscription service, as compared to users purchasing new models. Bloomberg’s Mark Gurman has shared estimates in his latest Power On newsletter, saying that Apple could earn a few hundred dollars more than the upfront price of an iPhone paid by a customer over a three-year period. Apple is also estimated to earn more than the average selling price of the iPhone with its rumours subscription model.
With Apple’s subscription for the iPhone, customers won’t have to pay a large amount up front while upgrading their smartphone. The report from Gurman estimates that Apple could make more than the average selling price for an iPhone at $1,260 (roughly Rs 95,100) by charging $35 per month (roughly Rs 2,600) a month for the iPhone 13, which is priced at $799 (roughy Rs 60,300). This amount is calculated for a three year period, which is an average time a user in the United States takes to upgrade their phone, the report said.
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Similarly, Gurman also calculated the amount Apple can make charging a $45 (roughly Rs 3,400) monthly fee for the iPhone 13 Pro. Here, Apple is estimated to make $1,620 (roughly Rs 1,22,200) as against the iPhone 13 Pro’s $999 sticker price (roughly Rs 75,400). Finally, Gurman said that Apple can make up to $1,800 (roughly Rs 1,35,800) with the iPhone 13 Pro Max at a $50 (roughly Rs 3,800) monthly fee for three years. The iPhone 13 Pro Max is otherwise priced at $1,099 (roughly Rs 82,900) onwards.
The report also states that Apple, despite over 40 percent margins in iPhone, will also benefit from the iPhones that users will return, as the company can refurbish them and sell again. According to Gurman’s report, a customer who stays in the subscription model for 10 years, could bring in $4,000 (roughly Rs 3,02,000) in revenue on the lowest iPhone tier.
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Apple’s iPhones also support software updates for more than five years, which means customers will hold on to phones longer. There are also some that upgrade their iPhone every year, which can be an expensive affair. A subscription model will benefit both, customers who want to upgrade to a new iPhone every year, and Apple since people are expected to be locked in to the subscription service for a longer time.
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