Monday, December 4, 2023

Yes, the iPhone 15 price drop was foreseeable: this is the explanation

This Tuesday they were officially presented the new iPhone 15. A family made up of four different models: the standard iPhone 15 and the Pro, Pro Max and Plus versions. Each one of them with a specific price and features.

However, there was something that particularly caught our attention. In Europe –as well as in other markets–, The price of this new family turned out to be lower than that of the iPhone 14. Something that many did not expect.

However, if you know how Apple works, This reduction was, in reality, foreseeable. And no, it is not a question of lower demand or a change in strategy – in the same way that the rise of the iPhone 14 was not the result of greed, as many claimed at the time. The explanation behind the price fluctuations that we saw in the 2022 models and, now, also in the iPhone 15 is another. And it is due, above all, to the money market.

VersioniPhone 14 (September 2022)iPhone 15 (September 2023)Difference
Standard1009 euros959 euros50 euros less the most recent version
Plus1159 euros1109 euros50 euros less the most recent version
Pro1319 euros1219 euros100 euros less the most recent version
Pro Max1469 euros1469 eurosZero euros difference, but it now has 256 GB instead of 128 GB

How Apple sets its prices

The iPhone 14 range maintained prices in the United States compared to the previous generation. However, in Europe – as well as in other countries – we suffered a notable price increase. The reason, as I explained at the time in the iPhone 14 review, was not greed, as many argued. The key was in the dollar-euro exchange rate.

In 2022, the global economic situation – inflation, war in Ukraine, etc. – caused the euro to lose value in relation to the dollar. And that forced Apple to raise prices in Europe if it wanted to earn a similar figure for a phone sold in Spain as for one sold in California.

The way Apple sets prices is relatively simple. First decide how much you want to charge for the product in the United States based on various factors. Then, it converts that figure to the currency of each country in which it operates – according to current exchange rates and future forecasts. And, ultimately, add the taxes applicable in each region (VAT, tariffs – if they exist –, etc.).

Why the iPhone 15 are cheaper

In September 2022, when the iPhone 14 was launched, dollar-euro exchange rates were notably detrimental to Europeans. However, the euro has strengthened significantly since then, as can be seen in the chart below, making the price drop we have seen with the iPhone 15 possible:

Euro-dollar evolution from September 1 until now. The euro has clearly strengthened since then.

Therefore, being aware of this situation in the money market and Apple’s way of working, This downward price change was predictable. The only exception is the iPhone 15 Pro Max, whose basic version has increased by $100 in the US and is now sold by default with 256 GB. In this case, the increases applied in the local market have offset the fall expected by the current exchange rate, therefore maintaining the same price as its predecessor. However, in the rest of the range, we have seen drops of between 50 and 100 euros. And that, without a doubt, is great news.

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