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Apple Repeats a Winning Strategy From Last Year: Higher iPhone Prices

September 12, 2018, 8:01 PM UTC

Apple debuted its annual lineup of new iPhones on Wednesday, with the usual sharper screens, faster chips, and longer battery lives. But those devices will also come with another more recent innovation by the tech giant: higher prices.

With the new phones, Apple is following a playbook that it successfully implemented last year. It bet that consumers would pay more for iPhones, despite them already being pricier than most rival smartphones.

In the end, shoppers were happy to pay up.

Apple’s cheapest iPhone introduced at its annual event in Cupertino, Calif. on Wednesday was the iPhone XR. It has a 6.1-inch LCD screen and a single camera on the back, much like last year’s cheapest model, the iPhone 8 (though it had a smaller screen). The new XR costs $749, $50 or 7% more than last year’s iPhone 8.

Apple points out that the XR’s screen is larger than the iPhone 8 and even the 8 Plus, which cost $799 last year.

Also on Wednesday, Apple introduced a pricier top-end phone—the new iPhone XS Max, with a 6.5-inch screen, that starts at $1,099. That’s $100, or 10%, more than the starting price of last year’s iPhone X. Again, the iPhone X didn’t have as big a screen, but it was the most expensive phone ever in Apple’s line up.

Taken together, the new higher priced iPhones could help Apple repeat a trick that pleased Wall Street last year. Although Apple didn’t sell more iPhones in late 2017 and early 2018 than it did a year earlier, the higher average sales prices led to a 14% jump in revenue.

Partly based on that gain and the promise of future price hikes, Apple’s stock price has risen 40% over the past year. Just a few weeks ago, the company became the first ever in the U.S. to reach a $1 trillion stock market value.

Competitors running software from Google (GOOGL) , like Samsung, LG, and Motorola, haven’t been able to hike prices as much. For whatever reason, the companies mostly haven’t been willing-or able-to get away with the same kinds of price hikes.

Apple on Wednesday also raised the price of its newest smartwatches. The Apple Watch Series 4 will start at $399, up from $329 last year for the Series 3. And a model with cellular connectivity will start at $499, up from $399 last year.