Apple Inc. (NASDAQ:AAPL) will release its next generation smartphones tomorrow, and fans of the company are speculating wildly about the device’s specs and design. One of the most interesting questions about the device surrounds the price. If the “C” in iPhone 5c stands for cheap, what price does Apple Inc. (NASDAQ:AAPL) think is cheap?

Apple iPHone 5c

Apple is a luxury electronics company. Almost all of its products sell at luxury prices to higher income consumers. That formula has worked out extremely well for the company in the last decade, but it’s found itself hitting a wall in China. Now Apple Inc. (NASDAQ:AAPL) is planning to release a smartphone specifically designed to appeal to lower income people, but what will the iPhone 5c cost?

Pricing the iPhone 5c

There are two major ways of trying to peg the cost of the iPhone 5c. The first is to take the cost of the likely components. The second involves speculating about the market that Apple Inc. (NASDAQ:AAPL) is trying to capture with the release of the iPhone 5c, and what price will allow it to get that market.

Analysts working on the cost of the iPhone 5c are looking at both ends. From a market perspective, a price of $400-500 appears to be low enough to capture the Chinese market that Apple Inc. (NASDAQ:AAPL) is so desperately looking for. A Morgan Stanley report found that a price of $486 is considered a good price for the iPhone 5c by Chinese consumers.

From a components point of view, the most likely configuration for the iPhone 5c is the same as the iPhone 4s, with a little customization. The iPhone 4s should move to the lowest rung on the iPhone ladder this year. Apple Inc. (NASDAQ:AAPL) currently sells its lowest priced phone, the iPhone 4, for $450.

What will the iPhone 5c cost?

Apple Inc. (NASDAQ:AAPL) is very likely to sell the iPhone 5c for between $450 and $500, judging by research from both the component side and the market side. The company will jealously guard its margins, even if it has lower prices. A $450 iPhone 4s in an iPhone 5 shell could be a big seller with very high margins.

Customers in the Western world will be wondering what the price of the iPhone will be, and whether it will be available to them. There are rumors that the “C” in iPhone 5c stands for ‘China’ rather than ‘Cheap’.