Just how cheap should Apple's cheap iPhone SE/iPhone 9 be?

One thing is for sure, it won't be cheap enough to satisfy everyone.

Rumors are circulating that Apple has begun production of a cheaper iPhone, aimed at those who find the price tag of the iPhone 11 unpalatable.

But how cheap should this iPhone be?

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The new "budget" iPhone, which many guessed initially would be called the iPhone SE 2 but there's now also a rumor that it might be called the iPhone 9, is part of Apple's plan to get those running older handsets to upgrade.

Apple's current lineup spans from the stratospherically priced iPhone 11 Pro Max, which starts at a no-nonsense $1,099, to the iPhone 8 at the other end, which, at $449, is hardly cheap, doubly so when you think that this handset was first released in September 2017.

So, where would the iPhone SE 2 (let's settle on that name for now) sit in the grand scheme of things? Well, if Apple wants to encourage those who are holding on to older handsets to upgrade, logic might dictate that it should be cheaper than the iPhone 8, because that price point doesn't seem to be working for those people. Or maybe they're not upgrading to the iPhone 8 because they are smart enough to know that it's getting pretty long in the tooth.

If the rumors are to be believed, and right now it's hard to make any prediction with any confidence, the new budget iPhone SE 2 will have the look and feel of the iPhone 8, and yet feature the latest A13 Bionic six-core silicon, albeit with 3GB of RAM and not the 4GB found in the iPhone 11 line.

With no Face ID, which apart from the OLED display is the priciest part of modern iPhones, Apple has a fair bit of leeway with pricing here, especially if it were willing to dip into its bountiful profit margin.

That said, Apple is unlikely to take the pricing too low as this might have the effect of cannibalizing sales of more expensive iPhones. While Apple has maintained in the past that it doesn't mind this happening because at the end of the day people are buying iPhones, cutting prices too hard too fast (and perhaps too unnecessarily deep) could harm revenue.

Also, if Apple staggers this release rather than bundling them in with the main iPhone release, then this might create a firebreak between the main high-end iPhone launch and the "budget" release.

So how low would Apple go? The iPhone SE original had a price tag starting at $399, and I'd be willing to bet a crisp $10 that this is the price point at which the updated handset will land.

Apple, being a survivor of the PC price wars in the 1990s and 2000s, will be well aware that there's no undoing a price cut, and that putting the focus too heavily on price is the way to end up in a race to the bottom.

While Apple could no doubt put together an iPhone that it could sell for $299, that seems far too generous, especially given the price tag on the iPhone 8. If anything, it would make more sense for Apple to slash the price of the iPhone 8, and allow that to mop up the low end, and it would be far less likely to cannibalize sales of higher-priced iPhones.

Where do you think Apple should price its budget iPhone? Let me know in the comments below.

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