Apple Should Raise Prices On iPhones

Yahoo Finance ·

Douglas A. McIntyre is the co-founder, chief executive officer and editor in chief of 24/7 Wall St. and 24/7 Tempo. He has held these jobs since 2006. McIntyre has written thousands of articles for 24/7 Wall St. He is an expert on corporate finance, the automotive industry, media companies and international finance. He has edited articles on national demographics, sports, personal income and travel. His work has been quoted or mentioned in The New York Times, The Wall Street Journal, Los Angeles Times, The Washington Post, NBC News, Time, The New Yorker, HuffPost USA Today, Business Insider, Yahoo, AOL, MarketWatch, The Atlantic, Bloomberg, New York Post, Chicago Tribune, Forbes, The Guardian and many other major publications. McIntyre has been a guest on CNBC, the BBC and television and radio stations across the country. A magna cum laude graduate of Harvard College, McIntyre also was president of The Harvard Advocate. Founded in 1866, the Advocate is the oldest college publication in the United States. TheStreet.com, Comps.com and Edgar Online are some of the public companies for which McIntyre served on the board of directors. He was a Vicinity Corporation board member when the company was sold to Microsoft in 2002. He served on the audit committees of some of these companies. McIntyre has been the CEO of FutureSource, a provider of trading terminals and news to commodities and futures traders. He was president of Switchboard, the online phone directory company. He served as chairman and CEO of On2 Technologies, the video compression company that provided video compression software for Adobe’s Flash. Google bought On2 in 2009.

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The headline conveyed the view that Apple should raise iPhone prices; the article body only provides an author bio and no concrete evidence, but one can infer the typical effects a price increase has on corporate results. Raising iPhone prices would likely lift unit ASP and margins immediately, driving improvements in Apple(AAPL)'s profitability and cash flow. Conversely, higher prices could reduce volumes in emerging markets and among price-sensitive mid-/lower-income consumers, weighing on volume-driven component suppliers and retail. A premium pricing strategy can bolster ecosystem revenue by offsetting hardware dependence with greater services and accessory sales, but it may slow upgrade cycles and increase medium- to long-term volume risk.

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