Why Apple raised the price of the iPhone, but not in the U.S. and China

Apple's newest iPhones, the bid 14 models, travel with better displays, cameras, and outer messaging, among different features and updates. But depending connected wherever you live, they besides whitethorn travel with a higher terms tag.

While immoderate analysts projected that Apple mightiness summation the terms of its latest iPhones crossed the committee owed to continued proviso concatenation challenges and inflation, imaginable buyers successful the U.S. and China saw nary increases compared to the bid 13 models.

But for consumers successful markets similar the U.K., Japan, Germany, and Australia, the newest models besides came with important terms increases.

For example, the basal iPhone 14 exemplary starts astatine $799 successful the U.S., the aforesaid terms that the institution charged for the iPhone 13 astatine its merchandise past year.

In the U.K., the basal iPhone 14 costs £849, oregon astir $975. The basal iPhone 13 was priced astatine £779, an summation of £70 oregon astir $80.

That terms quality lone increases with the much enhanced models. For example, the iPhone 14 Pro Max successful the U.K. is £150 much costly than the equivalent past year's model.

The crushed Apple took the measurement to summation the terms of phones successful those markets has to bash with currency fluctuations.

"Essentially each currency astir the satellite has weakened against the dollar," Apple CFO Luca Maestri said connected the company's fourth-quarter net telephone with analysts past week. "The beardown dollar makes it hard successful a fig of areas. Obviously, our pricing successful emerging markets makes it difficult, and the translation of that gross backmost into dollars is affected."

While Apple reported that its gross accrued 8% successful the 4th to $90.15 billion, Apple CEO Tim Cook told CNBC past week that the institution would person grown "double-digits" if not for the beardown dollar.

"The overseas speech headwinds were implicit 600 ground points for the quarter," Cook told CNBC's Steve Kovach. "So it was significant. We would person grown successful treble digits without the overseas speech headwinds." 

Foreign currency speech is "a precise important origin that is affecting our results, some gross and gross margin," Maestri said. Apple does hedge against its currency exposures "in arsenic galore places arsenic imaginable astir the world," helium said, but those sorts of protections bash commencement to trim arsenic the institution needs to proceed to bargain caller contracts.

But Apple besides examines the overseas speech scenery erstwhile it launches caller products, Maestri said, which led to these astir caller terms increases.

"In immoderate cases, for example, customers successful planetary markets had to ... they saw immoderate terms increases erstwhile we launched the caller products, which is not thing that, for example, U.S. customers person seen," helium said. "And that's unluckily the concern that we're successful close present with the beardown dollar."

While caller currency fluctuations versus the U.S. dollar are causing immoderate planetary buyers to wage much for an iPhone, determination person been instances wherever Apple alternatively absorbed those costs.

In 2019, erstwhile the U.S. dollar besides saw a emergence successful worth compared to different currencies, Apple adjusted overseas prices successful immoderate markets and reset them to adjacent oregon the aforesaid arsenic they had been successful section currencies a twelvemonth prior.

However, the crushed Apple did that was owed to a diminution successful income arsenic a effect of the terms increase. For example, successful Turkey, wherever the section lira had fallen 33% against the dollar successful 2019, Apple's income were down $700 million.

"We've decided to spell backmost to [iPhone prices] much commensurate with what our section prices were a twelvemonth ago, successful hopes of helping the income successful those areas," Cook told Reuters successful an interrogation astatine the time.

But successful 2022, Apple says it has not seen immoderate driblet disconnected successful request successful those markets. Maestri noted that it saw double-digit maturation successful India, Indonesia, Mexico, Vietnam, and different countries adjacent successful their respective reported currencies.

"It's important for america to look astatine however these markets execute successful section currency due to the fact that it truly gives america a bully consciousness for the lawsuit effect to our products, the engagement with our ecosystem, and successful general, the spot of the brand," Maestri said connected the net call. "And I person to say, successful that respect, we consciousness very, precise bully astir the advancement that we're making successful a batch of markets astir the world."

The U.S dollar has besides risen steadily against the Chinese yuan implicit the six months, but determination person been immoderate signs that request for the caller Apple iPhones successful the state mightiness beryllium weakening. While Maestri said Apple saw caller September 4th records successful Greater China, a recent study from Jeffries said that China income of the 4 caller iPhone 14 models implicit their archetypal 38 days of being sold are down by 28% compared to the iPhone 13 models implicit the aforesaid play of time.

Here are immoderate other comparisons of the prices of the basal iPhone exemplary betwixt the 14 and 13 series:

Apple isn't the lone institution acknowledging the interaction that currency headwinds are having connected its concern and pricing decisions.

McDonald's reported that currency dragged down its gross by 7 percent points, accounting for its 5% year-over-year diminution successful income – which would person accrued by 2% without the currency impact. With 60% of its income coming from extracurricular of the U.S., "Obviously, we're translating those income backmost into little U.S. dollars," CFO Ian Borden said connected the company's net telephone past week.

At P&G, the currency deed keeps getting bigger. The user products institution reported a 6% diminution successful nett income owed to "unfavorable overseas exchange," which followed 3% and 4% antagonistic currency impacts successful each of its erstwhile 2 quarters. The institution had to rise its forecast for the speech complaint interaction this twelvemonth to $1.3 billion, with CFO Andre Schulten saying connected the company's net telephone past week, "Foreign speech has continued its beardown determination against us."

James Quincey, CEO of Coca-Cola, which makes astir 80% of its net extracurricular the U.S., said the dollar has been a precocious single-digit headwind this year. "It's apt to beryllium a large headwind similar that adjacent year," Quincey said connected CNBC's "Squawk connected the Street" past week.

Coca-Cola, similar Apple, has looked to offset immoderate of the currency headwinds by raising prices, thing it said it expects to proceed to bash arsenic the U.S. dollar shows small signs of waning. "We are expecting pricing to beryllium up of mean adjacent twelvemonth connected apical of what's happened this year," Quincey said.

So far, Coca-Cola has not reported request dropping arsenic a effect of the higher prices, but Quincey did accidental determination are immoderate imaginable user concerns connected the horizon.

"We bash spot our consumers are opening to respond successful a accepted mode they would successful a recession; delaying discretionary and high-ticket discretionary items and possibly going to much backstage statement oregon discount dollar channels," Quincey said, noting "some effects of simplification of purchasing powerfulness retired determination successful the marketplace."