It’s okay to buy a $1,000 iPhone.
In private, when discussing the latest iPhone, I’ve frequently said that $1,000 is the price barrier at which a new iPhone doesn’t make sense to me. I was wrong. It’s actually really okay, and I think it’s probably one of Apple’s most reasonably priced devices1.
It all comes down to how much people use the iPhone. A conservative estimate is 80 minutes a day, if we assume that an unlock probably equals about a minute of device use, and go on the 80 unlocks a day figure reported last year. In reality, this number is a lot higher for a large percentage of people – the people that buy battery cases and seemingly always have dead phones. Those people are why iPhone X has a 2-hour battery life improvement over the 7, incidentally. Apple doesn’t make product changes for the 1% – they make them for much larger percentages of people. The upper cap is probably on the likes of 4-5 hours of screen on time per day, going by battery life improvements.
We know how much iPhones cost, and we know how much time they’re used. Americans get just shy of 7 hours of sleep, leaving 17 hours a day for activities. An average American adult uses about 8 hours a day at work, leaving about 9 hours for everything else. If we use rounding and say the range for iPhone use is between one hour and five hours a day, that’s 6% to 30% of a non-work day spent interacting with an iPhone. It’s about 10% to 55% of a work day.
For some people, half of their non-work day is probably iPhone use. For most, it’s at least 10% of their time.
Let that sink in for a second.
It’s hard to quantify hours, but they do have some amount of value. People work. If an iPhone were a person getting paid the US minimum wage, it would make $5,200 over the two-year life of a phone for an hour a day. If we go to the upper end of our cap, that’s $26,000 over the lifetime of a phone. Now, iPhones are just bits of glass that have circuits in them, but this is still a good comparator. If you assigned a human to do the work an iPhone did, you’d be paying at least $5k over two years, if not $26k.
There aren’t a lot more views to look at here. Economically, iPhones are cost effective if you replaced their jobs with humans. A laptop that costs $1,000 is far pricier of an investment, just as an example2. How many iPhone owners use a laptop as much as an iPhone? If you cut out work, not many. A minority, even. A laptop is basically a specialized iPhone. A luxury car, in comparison.
It’s not bad to spend $1,000 on a new iPhone. Like it or not, it’s one of the most used products in the world. It’s a heck of a lot more cost effective to spend less on an iPhone, but $1,000 isn’t particularly unreasonable. Not a great price, but not a horrible price either. It’s an okay3 price.
The iPhone is a great product to sell at a high price. Not only can people justify the value of it, but most don’t buy it in one shot. They never “feel” the cost of the iPhone. iPhones are sold mostly on equipment installation plans that get rolled into monthly phone bills in America. This means that, while an iPhone is totally worth $1,000, a consumer feels it a lot less. For most buyers, it’s more of a hit to buy a new laptop or a new TV. Nothing will change the fact that $1,000 is a lot of money, but virtually nobody sees that price up front. ↩
It’s probably a lot better to buy a cheaper laptop than a cheaper phone. A cheaper laptop can compose a word document well enough. A cheaper phone, on the other hand, will likely miss out on important security updates, have a poorer camera, and have worse battery life. ↩
Coincidentally, muttering “it’s okay” to yourself repeatedly is a great way to get over spending $1,000 on an iPhone if you buy it outright. ↩