Ever wonder why certain companies can just slap a higher price on their stuff and people will still queue up to get it? Apple and their iPhones are not left out in this discussion; a renowned investor has just had his say on the matter, proposing Apple has both room and perhaps even reason to push those prices higher. Joe Terranova, who is one of the top guys at Virtus Investment Partners and frequently appears on CNBC, commented on his thinking.
Here are 5 pieces of his argument on why Apple should consider charging high prices for iPhones:
1. They’ve Got Serious Pricing Power
Terranova’s major conclusion is that Apple is not just any company. They have incredible “pricing power.” What that translates into is Apple can charge prices pretty high, and folks will still fork it over for the brand that is THAT strong, the product is seen as desirable (and of course, everything just works SO well with their ecosystem). It is as if they have a certain attraction to draw them to a premium.
2. iPhones Seem to be a Necessity Now
He also mentioned something about, for many folks, the iPhone having gone way beyond just a cool gadget. It’s sort of turned into a “consumer staple,” a need that people believe they have in their day-to-day existence, and communication, and work, etc. When it becomes that critical, demand doesn’t fall off a cliff simply because the price goes up a bit.
3. Other Companies Do It Successfully
Terranova pointed to other businesses that have shown you can raise prices without alienating your customer base. He mentioned companies like Netflix and Chipotle as examples. These are places where prices have increased over time, and loyal customers generally stuck around. He seems to think Apple is in a similar strong position.
4. Focus on the Higher-End Models
He specifically noted that bumping up prices makes a lot of sense for the more expensive, high-end iPhone models. The customers who are already buying the Pro or Pro Max versions are typically less sensitive to price changes compared to someone buying a base model. They’re often willing to pay more for the latest and greatest features anyway.
5. People Might Not Even “Flinch” at a Big Jump
Terranova was pretty confident, even suggesting that consumers might not “flinch at all” even if Apple decided to go for a noticeable price hike – maybe something like 20%, especially on those premium phones. This really highlights his belief in the depth of customer loyalty and how much people value having the latest iPhone.
So, that’s the gist of this investor’s argument. It boils down to him seeing Apple as having a uniquely strong position in the market, with products that feel essential to users, giving them the ability to raise prices without much pushback, particularly on their more premium offerings. It’s definitely one perspective on Apple’s potential moves!
