That’s because we conflate cost and price. They are not the same. Cost is different from price. For example, an average compact car in the U.S. is priced at almost $21,000, but the ongoing cost is more. Much more. That’s how it works for Apple, too.
Car vs. Phone
I use the car vs. phone examples with my Android-toting friends and co-workers who complain about iPhones. “They cost too much.” Do they? Priced less? Yes. Cost more? Not so fast. OK, back to the car analogy.
If a compact car is priced at $21,000, then what are the costs?
Customers will pay for title, taxes, and license plates, right? Plus, each car owner needs insurance. That’s a monthly or annual ongoing cost. Gasoline is an ongoing cost, too, and, as with insurance, it varies between car models. Then, there’s the cost of maintenance.
See how that works?
It wouldn’t take but a few years for the cost of a car– including the initial price tag– to increase by 50-percent (I’m guessing) to $30,000, while the vehicle’s value goes down. Used cars are worth less than new cars.
One component works the same way on smartphones as it does on cars.
So, let’s say that in three years we spent $30,000 on a car– price plus ongoing costs– and the car depreciated in value to perhaps $12,000. The differential is $18,000 and that’s the true cost of owning the car.
iPhone works the same way.
That’s the gist of SellCell’s latest product depreciation chart.
In simple terms, iPhones are priced higher than most competing premium smartphones but also command a higher resale value. Depreciation is less. The resale value is deducted from the overall cost– price plus insurance plus accessories, et al– and that’s where iPhone wins again. Lower depreciation means a higher resale value which means lower cost of ownership.
Apple does not tout that built-in added value but it’s there. Unlike cars and trucks, see it more with premium smartphones vs inexpensive smartphones which are worth next to nothing after a couple of years. Apple sells brand new iPhone 8 models for as low as $449, or roughly the same amount as a used iPhone 8. Except it’s new.
The same added value shows up with iPad and Mac, too. Cost is not price.