Apple is riding on the limelight in recent times amidst its new product announcements and launches. The brand has now introduced the new iPhone Upgrade Program. This scheme allows the customers to pay for a new device over a span of 24 months with an installment of USD 32 per month. Though the program might not sound budget friendly at first look, there is another interesting feature to it, which is AppleCare+. The program provides the scope of trading a new iPhone with the old one at the end of 12 installments in 1 year and the two year repayment scheme starts afresh. Looking the current market hype, this scheme might grab a lot of mass consumer attention.
As per analysis like that of Barron’s and other published sources, this initiative may prove to be beneficial towards sales and financial figures. This scheme is expected to increase the Apple sales which is slowly nearing towards peak and will act towards customer retention in longer term. As per analysis of RBC Capital Markets, the financial margins are expected to rise. The analysis suggests that commonly an iPhone sells at USD 700, a section of which will be subsidized with the carrier and takes USD 350 to manufacture and results in a gross profit margin of 50 percent. In the initial year of the scheme revenue generated from an iPhone is USD 384 taking into account the USD 32 per month installment in 12 months. This is against the USD 175 if the entire cost is divided in two year term which results in the 55 percent gross margin. The larger profit picture comes into play in the second year when a user trades a new iPhone for an old one. The company can revamp the old phone at a cost of USD 500 approximately and is again sold at the manufacturing price USD 175 per annum. This results in the gross profit margin of 65 percent. Thus in the two year time frame a device will produce a revenue of USD 884 with 60 percent gross profit.
Looking at the current sales figures of iPhone 6s which have already surpassed the iPhone 6 sales, this scheme can be predicted to work towards the revenue and sales boost of the brand.
you can check all news and rumors about iPhone 7s on this site.