Why did Apple raise the price of the iPhone but not in the US and China

Why did Apple raise the price of the iPhone but not in the US and China

A customer inspects the iPhone 14 Pro Max inside the Apple Store in Marunouchi, Tokyo.

Stanislav Kojiko | SOPA photos | Light Rocket | Getty Images

appleThe latest iPhones, the 14 series models, come with Better screens, cameras and satellite messagesAmong other features and updates. But depending on where you live, it may also come at a higher price.

While some analysts have speculated that Apple may increase the price of its latest iPhone across the board due to continued supply chain challenges and inflation, potential buyers in the United States and China have seen no increases compared to the 13 series models.

But for consumers in markets such as the UK, Japan, Germany and Australia, the latest models have also come with big price increases.

For example, the base iPhone 14 model starts at $799 in the US, the same price the company charged for the iPhone 13 when it was released last year.

In the UK, the base iPhone 14 costs £849, or roughly $975. The base iPhone 13 was priced at £779, up from £70, or about $80.

This price difference only increases with improved models. For example, the iPhone 14 Pro Max in the UK is £150 more expensive than last year’s equivalent model.

The reason why Apple took the step of increasing the prices of phones in those markets is due to the fluctuations in currency rates.

“Essentially every currency around the world has weakened against the dollar,” Apple CFO Luca Maestri said on the company’s fourth-quarter earnings call with analysts last week. “A strong dollar makes it difficult in a number of areas. Our pricing in emerging markets obviously makes it difficult, and translation of that revenue into dollars is affected.”

While Apple reported that its revenue increased 8% in the first quarter to $90.15 billion, Apple CEO Tim Cook For CNBC last week That the company would have grown “in double digits” had it not been for the strong dollar.

“Forex headwinds exceeded 600 basis points during the quarter,” Cook told CNBC’s Steve Kovac. “So it mattered. We would have grown by double digits had it not been for the foreign currency headwinds.”

Foreign exchange is “a very important factor influencing our results, both on revenue and gross margin,” Maestri said. He said Apple is hedging its exposure to coins “in as many places around the world as possible,” but that those kinds of protections begin to decline as the company needs to keep buying new contracts.

Maestri said that Apple is also considering the foreign exchange landscape when it launches new products, which has led to these recent price increases.

“In some cases, for example, customers in international markets … had to see some price increases when we launched the new products, something that American customers did not see for example,” he said. “And that’s unfortunately the situation we’re in right now with a strong dollar.”

While recent currency fluctuations against the US dollar are causing some international buyers to pay more for an iPhone, there have been cases where Apple has absorbed these costs instead.

In 2019, when the US dollar also experienced an appreciation in value compared to other currencies, Apple adjusted foreign rates in some markets and reset them to approximately or the same as they were in the local currencies the previous year.

However, the reason why Apple does this is due to lower sales as a result of the price increase. For example, in Turkey, where the local lira fell by 33% against the dollar in 2019, Apple’s sales fell by $700 million.

“We decided to go back to [iPhone prices] More in line with our local prices a year ago, hoping to help sales in those areas, “Cook Reuters in an interview at the time.

But in 2022, Apple says it has not seen any decline in demand in those markets. Maestri noted that he has seen double-digit growth in India, Indonesia, Mexico, Vietnam and other countries even in their reported currencies.

“It is important for us to look at how these local currency markets are performing because it really gives us a good idea of ​​how customers are responding to our products, the interaction with our ecosystem, and the strength of the brand in general,” Maestri said. On earnings call. “And I have to say, in that regard, we’re very excited about the progress we’re making in a lot of markets around the world.”

The US dollar has also risen steadily against the Chinese yuan over the six months, but there have been some signs that demand for new Apple iPhones in the country may be weakening. While Maestri said Apple saw new records in the September quarter in Greater China, a A recent report from Jeffreys He said China’s sales of the four new iPhone 14 models during their first 38 days of sale fell 28% compared to the iPhone 13 models during the same time period.

Here are some Other Price Comparisons From the base iPhone model between 14 and 13 series:


  • iPhone 13: 1349 Australian dollars
  • iPhone 14: 1399 Australian dollars


  • iPhone 13: 98800 JPY
  • iPhone 14: 119,800 JPY


  • iPhone 13: €899
  • iPhone 14: 999 euros

Companies feeling the impact of the strong dollar

Apple isn’t the only company to acknowledge the impact of currency headwinds on its business and pricing decisions.

McDonald’s It reported that the coin fell 7 percentage points in revenue, which represents a 5% drop in sales year over year – which would have increased 2% without the currency’s impact. With 60% of its sales coming from outside the US, “we’re clearly translating those sales back into lower US dollars,” Chief Financial Officer Ian Borden said on the company’s earnings call last week.

in Procter & GambleThe currency is constantly increasing. The consumer products company reported a 6% drop in net sales due to “unfavorable foreign exchange,” which came after a 3% and 4% negative currency impact in each of its previous quarters. The company had to raise its forecast for the impact of the exchange rate this year to $1.3 billion, as Chief Financial Officer Andrei Schulten said on the company’s earnings call last week, “Foreign currencies continued their strong movement against us.”

James Quincey, CEO of coca cola, which generates nearly 80% of its profits outside the United States, said the dollar has been a high single-digit headwind this year. “It’s probably going to be a big headwind like that next year,” Quincy said on CNBC’s “Squawk on the Street” last week.

Coca-Cola, like Apple, has sought to offset some of the currency headwinds by raising prices, something it said it expects to continue as the US dollar shows few signs of weakening. “We expect prices to be higher than usual next year on top of what happened this year,” Quincey said.

So far, Coca-Cola has not reported a drop in demand as a result of the price hike, but Quincy said there are some potential consumer concerns on the horizon.

“We are seeing that consumers are starting to respond in a traditional way in a recession; delaying discretionary, highly priced discretionary items and possibly going to more private brands or dollar discount channels,” Quincy said, noting “some effects of the reduction in purchasing power in the market.” .

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