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Apple CEO Tim Cook speaks during an Apple product announcement at the Apple campus in Cupertino, California.
Apple's iPhone 6 could arrive next year and cost about $100 more than the current iPhone 5S, according to a report.
The reason for the price hike is because it will feature a larger display and faster processor, according to Susquehanna Financial Group analyst Chris Caso. In order to keep profits high, Apple will likely hike the price.
"When iPhone 5 was launched, Apple's phone margins declined because the new features (most notably the display) added cost to the bill of materials, yet the price point of the phone remained unchanged," Caso wrote in a research note. "Since we're expecting a host of new features in the iPhone 6 (including a larger screen), we expect the bill of materials cost of the phone to increase as well."
Apple created a cheaper iPhone 5C to address the emerging global markets and give consumers a cheaper alternative, and will likely drop prices on old phones once the iPhone 6 is launched as it has in the past. However, the next iPhone will have costlier components.
"At present, the launch price of iPhone 5S (both subsidized and unsubsidized) is the same as the launch prices for Samsung's Galaxy S series of flagship phones," Caso wrote. "As such, we think Apple could get away with a $50 to $100 premium for a larger screen size iPhone 6. We think such a move could avoid the margin erosion that occurred when the iPhone 5 was launched."
That means instead of $199 with a two-year contract, the new iPhone 6 could be $299 with a two-year contract. The extra money will give users a bigger display, likely 5 inches or more, a faster processor and LTE wireless capability. To add to its cachet, the iPhone 6 will also probably be more streamlined and lighter.
In order for Apple to demand such a price, it has to deliver a truly remarkable device, otherwise consumers will stick with the iPhone 5S until the next, and possibly cheaper, version launches.