iPhone broad margins

I have previously written that I thought that iPhone margins prior to the discount were consistent with what one might have thought their price elasticity of demand to be (around -2). The discount seemed to imply that that elasticity was actually about (-3.37); which indicates some shift in consumer demand beyond first movers.

Now there is a report that Apple are making $18 a month from AT&T iPhone users ($432 over two years). At a unit cost of $280.83, that translates to an elasticity of about -1.51 (that is, a 1 percent rise in price will lead to a 1.5% fall in sales). That is a highly price inelastic good in that case. Although if it is true for every iPhone it suggests to me that there are more discounts still to come.

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