Here’s Why Apple Didn’t Raise iPhone Prices in the US, But It Did in Other Countries

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Apple has not increased the price of the iPhone 14 series in the US and China. Those who bought one of the two iPhone 14 Pro models received a number of new features such as notch replacement, shape-shifting and multitasking Dynamic Island. Improvements were also made to the displays and cameras on the Pro models, with a faster chipset, more memory and larger batteries.

The strength of the US dollar forced Apple to raise iPhone prices in certain countries

But in the United States, the Apple iPhone 14 Pro started at $999 while the iPhone 14 Pro Max was tagged at $1,099 and up. That pricing is in line with what Apple charged for the iPhone 13 Pro and iPhone 13 Pro Max. It also matches the prices for the iPhone 12 Pro and iPhone 12 Pro Max. Heck, it’s even the same price used on the iPhone 11 Pro and iPhone 11 Pro Max.

This streak should eventually come to an end, and we expect that next year with the iPhone 15 redesign will be the perfect time for Apple to raise prices in the US for the iPhone 15 Pro models. While Apple won’t have to move to a USB-C port in Europe until fall 2024, trusted TF International analyst Ming-Chi Kuo says Apple will phase out its own Lightning port early and switch to USB-C globally with the iPhone 15 line next year.
According to CNBCthe strong dollar is why Apple increased prices in several countries, while they remained the same in the United States. The strong dollar means that Apple would receive less dollars when converting foreign earnings to the US dollar. For example, a year ago, every pound sterling in England that Apple received for selling a product in the country could be converted into $1.35. But problems with the British economy have weakened the pound against the dollar.
Today, for every pound of sterling received by Apple, the currency can be converted to $1.14. That’s a drop of 15.6% and Apple is paying the price. So in the UK, the base model iPhone 14 was increased by £70 to £849, a 9% increase. And the more expensive the iPhone, the higher the increase Apple announced. Back in the UK, Apple increased the price of the iPhone 14 Pro Max in the UK by £150 over the price of the iPhone 13 Pro Max. If there were no currency movements, Apple’s 8% increase in fiscal revenue in the fourth quarter would have been a double-digit year-over-year increase. That is the word of CEO Tim Cook. During the company’s quarterly call, Apple CFO Luca Maestri said: “Essentially, every currency in the world has weakened against the dollar. The strong dollar is making it difficult in a number of areas. It’s clear that our pricing in emerging markets is struggling. and the translation of that revenue back into dollars is affected.”

Ironically, having a strong dollar isn’t always good for US businesses. It may allow them to pay less for deliveries, but for a multinational company like Apple, it forces them to raise prices abroad to keep their US dollar revenue stable. On CNBC, Cook admitted that “foreign exchange headwinds were over 600 basis points for the quarter. So it was significant. Without the foreign exchange headwind we would have grown at double digits.”

Some years Apple ends up eating up the cost of exchange rate fluctuations

Apple CFO Maestri says foreign exchange is “a very important factor influencing our results, both revenue and gross margin.” To mitigate the effects of currency movements, Apple hedges its exposure, as most global companies do. But these hedges are not always perfect.

Apple also looks to the currency markets around the world when it releases a new product. “In some cases, for example, customers in international markets had … they saw some price increases when we launched the new products,” Maestri said, “which is not something that US customers have seen, for example. And that’s unfortunately the situation where we’re going.” we are now with the strong dollar.”

In the past, Apple had to eat up the cost of exchange rate fluctuations. In 2019, when the US dollar was also strong, Apple tried to keep prices stable on an annual basis in many markets. Exchange rate fluctuations can lead to massive declines in US dollar earnings. In Turkey, for example, the lira fell 33% against the dollar in 2019 and sales in the country fell by a staggering $700 million.

This year, Apple says demand for iPhones hasn’t slowed down, even in markets where fluctuating local currencies forced Apple to raise its prices. Maestri says Apple delivered double-digit growth in India, Indonesia, Mexico, Vietnam and other countries, even when the results are calculated in their declining currencies.

“It’s important for us to look at how these markets are performing in local currency because it really gives us a good idea of ​​customer response to our products, engagement with our ecosystem and overall brand strength,” says Maestri. during the call for profit. “And I have to say, in that regard, we feel really, really good about the progress we’re making in many markets around the world.”

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