When you buy an iPhone you pay about $200 because the service carrier subsidizes the rest. Otherwise the iPhone would cost about $600 and a lot more people would be looking at Samsung and Motorola. That’s the beauty of the iPhone marketing strategy, explains Jay Yarow at Business Insider. If AT&T and Verizon didn’t cover the extra costs in order to hook you into their services, that iPhone would be priced more like a Mac or an iPad–high-end equipment whose quality is reflected in the price.
Macs are more expensive than PCs, as the world knows, and iPads are pricier than comparable tablets. Consumers have to choose to pay more to get Apple quality with these devices, but the way the iPhone is marketed consumers don’t have to make the hard decisions. It’s like if Exxon-Mobil made every Mercedes the same price as a Toyota–as long as you promised always to fill your Mercedes with Exxon gas. That’s the iPhone deal. And it’s why iPhone can dominate and win such broad market share, despite being high-end.
