Last week, Apple CEO Tim Cook said the quiet part out loud: soaring costs for memory and storage chips will likely lead to a price increase on Apple hardware. Higher prices for iPhones are expected with the September 2026 refresh of the model lineup, and higher prices for Mac computers and iPads may come sooner than that.
Basic economics teaches that increased prices lower demand for products. A quick trip down Microeconomics Memory Lane reminds us of the exceptions. Giffen goods are inferior products that see growing demand as their prices increase, since consumers are squeezed and have no lower price options. That is not going to be Apple’s experience. Veblen goods are luxuries that see growing demand as prices increase, since higher prices makes them appear even more special. With the ubiquity of Apple’s products, and their accepted practical-luxury market positions, that is also not likely.
So one would expect to see some downward pressure on demand for Apple devices following price increases. We might see this in a few different aspects of iPhone consumer behavior, including model choice, storage capacity upgrades, and length of time between phone purchases.
As for models, there seems to be room to shift down from premier to more basic ones. Model mix has migrated to the most advanced and expensive phones in recent years. For the current iPhone 17 model lineup, the Pro and Pro Max garnered 50% of all sales, with the base iPhone 17 at 22% (Chart 1). The new 17 Air and updated 17e together had under 10%.
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