iPhone Subscription Service Could Rake in More Money for Apple Than Average iPhone Selling Price: Report

iPhone owners may be able to upgrade to the latest model without a large upfront cost.

By David Delima | Updated: 4 April 2022 15:45 IST

iPhone Subscription Service Could Rake in More Money for Apple Than Average iPhone Selling Price: Report

iPhone owners reportedly hold on to their devices for three years before upgrading to a newer model

Highlights

Apple is said to be working on a hardware subscription program
The average iPhone selling price is $825 (roughly Rs. 62,300)
Apple has not officially revealed any plans to launch such a service

Apple is rumoured to be working on a hardware subscription service that would let users pay a monthly subscription fee to get access to the latest iPhone model every year. According to a new report, the company could rake in even more money, compared to when users purchase a new upgrade for their existing iPhone model. Meanwhile, customers would not have to shell out a large amount of money upfront for a new iPhone while always upgrading to the latest model.

While the Cupertino company is yet to announce any plans for such a subscription service for its smartphones, Bloomberg's Mark Gurman has shared estimates of how much money Apple could generate from its rumoured monthly subscription service, in his weekly Power On newsletter. Apple could reportedly earn a few hundred dollars more than the upfront price of a smartphone paid by a customer over a three-year period — and more than the average selling price of a new iPhone, with its rumoured subscription service.

Apple's recent iPhone models are equipped with powerful hardware and are supported by software updates for more than five years, which means that the average customer holds on to their iPhone for a longer period. However, some smartphone users upgrade to the latest model every year, which can be an expensive affair. The report cites Counterpoint Research's claim that the average selling price of an iPhone is $825 (roughly Rs. 62,300).

Apple Said to Be Working on Hardware Subscription Service for iPhone

Using three different tiers, the report estimates that Apple could make more than the average selling price for an iPhone — $1,260 (roughly Rs. 95,100) by charging $35 (roughly Rs. 2,700) a month for an iPhone 13 priced at $799 (roughly Rs. 60,300). The amount is calculated over a three-year period, which is the average time a user in the US waits to upgrade their iPhone, according to Gurman.

Meanwhile, Apple could make $1,620 (roughly Rs. 1,22,200) over three years by charging $45 (roughly Rs. 3,400) a month for the iPhone 13 Pro that costs $999 (roughly Rs. 75,400). Finally, the company could earn $1,800 (roughly Rs. 1,35,800) with a monthly subscription fee of $50 (roughly Rs. 3,800) for the iPhone 13 Pro Max priced at $1,099 (roughly Rs. 82,900).

The report also states that Apple makes more than 40 percent margins on iPhone hardware, and might benefit from customers returning their older phones, which could be refurbished and sold again. According to Gurman, a customer who remains in the program for a 10-year period could bring in $4,000 (roughly Rs. 3,02,000) in revenue, on the lowest iPhone tier. Meanwhile, customers will benefit from not having to shell out a large amount of money upfront every year when a new iPhone model is launched.

Apple Said to Cut iPhone, AirPods Output as Demand Dwindles

According to a report from July 2021, Apple was said to be working on a service that would allow users to pay for Apple Pay purchases in instalments. The company is now working to develop its own financial back-end and payment processing technology which could offer it independence from partners, according to Gurman. As previously mentioned, Apple is yet to officially reveal any details of a planned mobile hardware subscription service.

Will the 2022 iPhone SE sink or swim? We discuss this on Orbital, the Gadgets 360 podcast. Orbital is available on Spotify, Gaana, JioSaavn, Google Podcasts, Apple Podcasts, Amazon Music and wherever you get your podcasts.

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iPhone 13

REVIEW
KEY SPECS
NEWS

Design
Display
Software
Performance
Battery Life
Camera
Value for Money

Good
Great performance
Versatile cameras
Sharp, bright display
Good battery life

Bad
Standard display refresh rate, intrusive notch
Expensive

Read detailed Apple iPhone 13 review

Display 6.10-inch

Processor Apple A15 Bionic

Front Camera 12-megapixel

Rear Camera 12-megapixel + 12-megapixel

Storage 128GB, 256GB, 512GB

OS iOS 15

Resolution 1170x2532 pixels

More Apple mobiles Apple mobiles price in India

iPhone 13 Pro

REVIEW
KEY SPECS
NEWS

Design
Display
Software
Performance
Battery Life
Camera
Value for Money

Good
Bright, crisp 120Hz display
Excellent construction quality
Good battery life
Great overall performance
Versatile cameras

Bad
Extremely expensive
Bulky and heavy
Display notch in 2021

Read detailed Apple iPhone 13 Pro review

Display 6.10-inch

Processor Apple A15 Bionic

Front Camera 12-megapixel

Rear Camera 12-megapixel + 12-megapixel + 12-megapixel

Storage 128GB, 256GB, 512GB, 1TB

Battery Capacity 3095mAh

OS iOS 15

Resolution 1170x2523 pixels

More Apple mobiles Apple mobiles price in India

iPhone 13 Pro Max

REVIEW
KEY SPECS
NEWS

Design
Display
Software
Performance
Battery Life
Camera
Value for Money

Good
Bright, crisp 120Hz display
Excellent construction quality
Stellar battery life
Great overall performance
Versatile cameras

Bad
Extremely expensive
Bulky and heavy
Display notch in 2021

Read detailed Apple iPhone 13 Pro Max review

Display 6.70-inch

Processor Apple A15 Bionic

Front Camera 12-megapixel

Rear Camera 12-megapixel + 12-megapixel + 12-megapixel

Storage 128GB, 256GB, 512GB, 1TB

OS iOS 15

Resolution 1284x2778 pixels

More Apple mobiles Apple mobiles price in India

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Further reading: Apple, iPhone

David Delima

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As a writer on technology with Gadgets 360, David Delima is interested in open-source technology, cybersecurity, consumer privacy, and loves to read and write about how the Internet works. David can be contacted via email at DavidD@ndtv.com, on Twitter at @DxDavey, and Mastodon at mstdn.social/@delima. More