Apple's Leasing Programme May Offset Higher iPhone Prices

Apple's upcoming iPhone models may be pricier than expected due to rising memory and storage costs, but the company has a potential solution in its new leasing programme. Morgan Stanley analyst Erik Woodring estimates that iPhone 18 models could cost as much as $200 more, squeezing hardware margins.

The leasing programme, called Apple Upgrade, allows customers to spread the cost across 12 or 24 months instead of paying upfront. For eligible US customers, payments start at $17.99 a month through partner Klarna. Woodring believes that Apple can pass on some costs to customers, and Morgan Stanley expects price increases to add about 1% to fiscal 2027 earnings.

While Apple has not confirmed any price increase, the company has already raised prices on some Macs and iPads. Analysts are now debating how much iPhone prices might rise rather than whether an increase is coming. Woodring notes that a $100 or $200 increase could lift Apple's average selling price and offset component inflation without requiring rapid shipment growth.

Apple Upgrade also provides benefits to the company, such as lower affordability barriers, faster replacement cycles, stronger direct engagement, and opportunities to capture value from returned devices. Bank of America analyst Wamsi Mohan described Apple Upgrade as 'directionally positive' and retained a Buy rating with a $380 price objective.

However, not all analysts are optimistic about the prospects for Apple's iPhone sales. KeyBanc downgraded Apple to Underweight with a $250 target after citing weaker hardware demand and slowing upgrades. The firm warned that higher prices and reduced carrier subsidies could make fiscal 2027 growth harder to achieve.