A next-generation iPhone 17 is held during an Apple special event at Apple headquarters in Cupertino, California, on Sept. 9, 2025.
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Cupertino, CA – Apple (AAPL) has strategically adjusted its iPhone pricing structure during its latest product unveiling, a move widely anticipated by analysts and investors given the prevailing economic headwinds and evolving supply chain dynamics. The iPhone 17 Pro now enters the market at a starting price of $1,099, marking a $100 increase from the previous year’s iPhone 16 Pro. Furthermore, the company has introduced the iPhone 17 Air, a new slimmed-down model, priced at $999, effectively replacing the iPhone 16 Plus, which retailed for $899.
Despite navigating the complexities of international trade relations and successfully diversifying its manufacturing footprint, notably shifting a significant portion of iPhone production to India to mitigate tariff impacts on U.S. imports, Apple’s price adjustments signal a broader response to escalating input costs. While CEO Tim Cook has been lauded for his deft handling of supply chain challenges, the company is projected to absorb over $1 billion in tariff-related expenses this quarter alone, pressuring margins and influencing consumer pricing.
In a calculated effort to offset the perceived price surge, Apple highlighted that all entry-level iPhone 17 models now feature a base configuration of 256GB of storage, doubling the 128GB standard offered in the prior generation. This strategic upsell aims to provide consumers with greater value upfront, mitigating price sensitivity and encouraging adoption. As Greg Joswiak, Apple’s chief marketer, stated during the launch event, “iPhone 17 Pro starts at $1099, the same great price as last year’s 256 gigabyte iPhone 16 Pro,” subtly emphasizing the enhanced storage capacity.
However, the cost of upgrading storage remains a significant revenue driver for Apple. Consumers opting for 512GB on the iPhone 17 Air will incur an additional $200, emphasizing the company’s ability to monetize value-added features and boost average selling prices. This move also aligns with Apple’s broader ecosystem strategy, where incremental hardware upgrades and subscription services increasingly contribute to the company’s recurring revenue streams.
The decision to increase the price of the entry-level Pro model above the $999 threshold for the first time since the iPhone X in 2017 reflects Apple’s pricing power and its confidence in consumer demand for premium features. Meanwhile, maintaining the starting price of the standard iPhone 17 at $799 and the iPhone 17 Pro Max at their previous levels suggests a segmented approach to market penetration. This pricing strategy allows Apple to cater to a wider range of consumers, optimizing sales volume while maximizing profitability in key market segments.
Apple’s commitment to stable pricing extended to other hardware offerings, including the latest AirPods with real-time translation capabilities, priced at $249, and the Apple Watch Series 11 and Ultra 3, maintaining their respective price points. This consistency across its product portfolio reinforces Apple’s brand value and strengthens customer loyalty in an increasingly competitive market.
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