Here's how Apple makes profit even if it sells fewer iPhones

The key to Apple's phenomenal success lies in the pricing of its devices

It’s party time at Apple headquarters. The company has released its first quarterly report for the year 2018, and guess what? It has managed to earn bucket loads of money despite a shorter accounting period.

The Cupertino-based tech giant reported a record $20 billion in its quarterly profits which was driven by strong sales in the international market. The company also reported a quarterly revenue of $88.3 billion which is a 13% increase from last year.

While the company managed to earn profits in a relatively shorter financial quarter owing to the delayed release of its anniversary edition iPhone, iPhone X, the tech giant said it sold 77.3 million iPhones. This number is 1% down from last year when the company sold 78.3 million iPhones.

ALSO READ: iPhone X price, specifications, features, and everything else

iPhone X

Apple iPhone X (Photo: Pixabay)

Interestingly, iPhone sales (and the revenue earned) managed to surprise not only the tech analysts but the company insiders as well. Here’s what Apple CEO Tim Cook said in the press release:

We’re thrilled to report the biggest quarter in Apple’s history, with broad-based growth that included the highest revenue ever from a new iPhone lineup. iPhone X surpassed our expectations and has been our top-selling iPhone every week since it shipped in November.

To put it simply, Apple earned higher profits this year despite a dip in sales. The question is how?

ALSO READ: iPhone 8 Plus price, specifications, features, and everything else

Cost, matters

The trick to Apple’s rising profits lies in the pricing of its iPhones. The company introduced iPhone 7 and iPhone 7 Plus in September 2016 with a starting price of $649. However, when the company released iPhone 8 and iPhone 8 Plus back in September last year, the starting price was pegged at $69 which was $50 more than its predecessor.

On the other hand, the tech giant priced its anniversary edition iPhone, which went for sales a month later, at a whopping $999 which was $300 more than iPhone 8 and $350 more than iPhone 7.

iphone 8, Apple iPhone 8

iPhone 8 Plus (Photo: Facebook)

So, while Apple sold fewer iPhones in the last quarter of the year, the price of iPhone compensated for the loss in sales.

ALSO READ: Apple iPhone X’s Face ID is a disaster. Here’s proof

That said, the company hasn’t turned a blind eye towards its dipping sales numbers and the impact that its admission of guilt, wherein it revealed that it deliberately slowed down batteries in older iPhones, will have on the sales. It has predicted a revenue between $60 billion and $62 billion for the next quarter.

Will Apple’s ‘smart pricing’ help it maintain its profit numbers, is something we will have to see.