source from:ft
https://www.ft.com/content/1746ddae-684c-11e7-8526-7b38dcaef614
Apple Inc  Add to myFT
Apple: dial it up Premium

A 1,000 dollars iPhone is a necessary move, as long as it is good enoughLex
Read next
Investors braced for volatility in tech stocks

11 Save
YESTERDAY
Vertu’s demise last week shows the limits of luxury phones. One apparent lesson — who could have foreseen? — is that few people will pay more than 10,000 dollars for a phone.

But if five figures was a stretch, what about four? Rumours are that the highest-priced model in Apple’s new iPhone 8 line-up, expected to be announced in September, will exceed 1,000 dollars for the first time.

Setting a level which some expect could even reach 1,500 dollars — almost double the price of today’s iPhone 7 Plus — seems an extraordinary move for the world’s biggest company with its biggest device. Apple should, though, aim high for two reasons.

First, supply. The top-end version is expected to use an OLED screen. Supplies of this bendy technology are tight, and controlled by rival Samsung. Reining in demand with a high price might make a virtue of necessity.

Second, it would help shift investors’ fixation away from unit sales, a battle Apple cannot ultimately win. With the iPhone accounting for more than 60 per cent of Apple’s revenues, shareholders are understandably obsessed with how many are sold and whether the inevitable saturation point has arrived. If the average selling price can be lifted 50 dollars or 100 dollars from 660 dollars today, the ensuing boost to revenues and profits would more than cushion the blow of volumes tailing off.

Apple has already been tweaking its typical price range to make the top a little more expensive and pushing models with more memory capacity, which carry higher margins. It would be wise to keep going, if the market will bear it.

Can it? A recent survey commissioned by Goldman Sachs showed that 12 per cent of respondents would probably buy a 999 dollars iPhone this year, while 11 per cent would probably not “unless impressed by features”; 16 per cent plan to buy a cheaper model and the rest will choose a different brand or none at all. That suggests a decent amount of price elasticity.

Having a top of the range version for so-called “power users” would match what Apple does in other categories. The Mac desktop computer and MacBook notebook have had “pro” version since 2006. The iPad Pro was introduced in 2015.

Yet the real lesson from Vertu is that even the spendthrift rich are not total suckers. Charging a premium price will have to deliver a truly innovative product along with the bling, or Apple will have done more harm than good to the status of its most profitable product.

The Lex team is interested in hearing more from readers. What would a 1,000 dollars iPhone have to offer for you to consider buying it? Will it keep revenues growing? Please tell us what you think in the comments section below.