iPhone 6 Price Could Be Raised By $100

iPhone 8JESHOOTS / Pixabay

The iPhone 6 could cost $100 more, if Apple Inc. (NASDAQ:AAPL) has its way, according to Jefferies analyst Peter Misek. He states that the company has been speaking with carriers about starting the iPhone 6 out at a $300 subsidized price. Of course as you can imagine, he said carriers aren’t too happy about that.

Will Apple succeed in raising the iPhone 6 price?

The analyst believes that the iPhone 6 will be much better than offerings from competitors. In fact, he doesn’t think that even Samsung Electronics Co., Ltd. (LON:BC94) (KRX:005930)’s next generation Galaxy S5 will be competitive enough to take away from Apple Inc. (NASDAQ:AAPL)’s sales.

As a result, he thinks the company will succeed in convincing mobile carriers to raise the price of the iPhone 6 somewhat, even if it isn’t by the full $100 it wants.

Apple could offset negative margins

Misek suggests that even if the iPhone 6 has an increase of $50 in the average selling price, Apple Inc. (NASDAQ:AAPL) would be able to offset the negative gross margin which typically occur when the new version of the handset is launched. He also believes that raising the average selling price of the iPhone by $50 would lift Apple’s revenues by 2% and its earnings per share by 11%. He believes it would also increase gross margins by 375 basis points.

If the price of the iPhone 6 bumped the average selling price up by the full $100 Apple Inc. (NASDAQ:AAPL) is seeking, then he thinks the company’s revenue would climb by 6% and its earnings per share increase by 24%. He thinks a $100 price increase for the iPhone 6 would raise gross margins by 700 basis points.

Bigger iPhone 6 could warrant higher price

Of course this isn’t the first time we have heard that Apple Inc. (NASDAQ:AAPL) might start charging more for the iPhone 6. Others have said a price increase would make sense because of the larger screen. In addition, if there really are two bigger versions of the handset this year, Apple could probably get away with charging more for the larger one.

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About the Author

Michelle Jones
Michelle Jones was a television news producer for eight years. She produced the morning news programs for the NBC affiliates in Evansville, Indiana and Huntsville, Alabama and spent a short time at the CBS affiliate in Huntsville. She has experience as a writer and public relations expert for a wide variety of businesses. Michelle has been with ValueWalk since 2012 and is now our editor-in-chief. Email her at [email protected]

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