The iPhone 16 Money Machine

Apple is clearly doing something right; the $3.36 trillion market cap of the company shows that. Part of their success is down to creating great products, and the iPhone 16 is no exception.

I do have one problem with the company, and that is their predatory upselling strategy. I’ve said it before, and I’ll say it again: although Apple are happy to take your money for any iPhone, they’re doing their best to make sure you spend the maximum amount of money possible (whether it gives you a better experience or not) in a way that just isn’t fair for their customers.

The Tactic

Apple’s basic tactic is to make it psychologically difficult to buy any given handset when the next step in the product lineup is tantalizingly close and will give a better experience for just a relatively small cost increase.

This trick works like a staircase where Apple will not be satisfied unless you are at the top step.

                                                               An old man thinking about how to get all your money

iPhone 14

Is last year’s model too new for you? Why not buy the iPhone 14 for just “from $599”?

Sure, $599 does feel cheap but Apple has a special way to discourage the purchase. In 2023 128GB of storage is unacceptable for the vast majority of users so you’ll probably opt for the $699 256GB version.

$699 is a great deal of money for an old model iPhone. I suspect few people actually opt for this model, and only exists to give a headline “affordable” iPhone option.

The next step on the ladder is likely to be more tempting.

iPhone 15

Last year’s model might be sufficient for most users and comes at a more reasonable price than the newest iPhone.

It comes in at the same price as the iPhone 14, but with a skinny 128GB of storage.

Again, most users will opt for 258GB of storage, which brings the price up to $799. I think $799 for last year’s model is unlikely to fly off the shelves.

The next step on the ladder is likely to be more tempting.

                                               An old man convincing you software couldn’t run on last year’s iPhone

iPhone 16

The new iPhone starts at $799. Apple is still providing the base model with an extremely basic 128GB of storage to make this usable you’ll pay $899.

I actually think Apple is happy if you buy a basic iPhone 16. They do get a great profit margin. That means you need to pay an extra $200 for the…

The next step on the ladder is likely to be more tempting.

iPhone 16 Pro

I think most people want a professional phone. Apple has you covered with their Pro lineup if you really need that extra button (what were they thinking?).

iPhone 16 Pro users are expected to be the most professional of all users, so Apple doesn’t insult them with a paltry 128GB of storage.

Sorry, everyone. To get 256GB professional storage on your professional phone you pay $1099.

I know this is the starting price of the pro version (the iPhone 16 Pro Max) but honestly, I think Apple is more than happy to get $1099 of your hard-earned money.

Apple’s Strategy

There is psychology around this, and Apple’s use of the decoy effect is well documented.

For Apple’s iPhone pricing, the cheaper models with insufficient storage act as the decoy. They’re priced in such a way that the next model up seems like a much better deal for just a little more money which nudges customers to spend more than they initially intended.

Customers oftentimes reach the top-tier model, having justified each incremental cost increase along the way.

The Evil Apple do

I think I wouldn’t be so against this pricing and marketing strategy if the innovation of the products justified it. This year seems to be a new chip and a new button.

I can imagine many Apple fans leaving old mobiles in the drawer to purchase the latest phone with all of the negative economic and environmental impacts that brings.

Conclusion

Apple does a great job at getting people to spend more money than they want to. The decoy effect works!

I know people will slide into the comments to white knight for a trillion-dollar company.

It’s amazing they still 1). Get away with this, and 2). are still selling the iPhone 14 and 3). This works for them.

For fun, here is the inevitable keynote bingo. How many did you get?