As Apple Inc AAPL prepares to launch the iPhone 16 on Monday, the biggest question for investors is pricing.

JPMorgan analyst Samik Chatterjee stresses that “the pricing of the iPhone will be an important observation point, with premiumization expected for the less price-elastic high-end Pro models.”

While the base models of the iPhone 16 and Plus are expected to maintain their current prices of $799 and $899, respectively, the Pro models could see a price increase.

According to Chatterjee, “We expect a tiered pricing approach for the new lineup, meaning that prices for the more flexible base model and Plus model compared to the iPhone 15 will remain unchanged despite the inclusion of AI features.” The iPhone 16 Pro Max could cost between $1,199 and $1,299, allowing Apple to offset rising costs due to storage prices and A18 processor chips.

AI features, iOS 18 rollout

Chatterjee also points out that the launch is not just about hardware upgrades. Apple’s next-generation iOS 18 and its integration with AI-driven features are equally important. Release timing is another crucial factor.

Chatterjee adds, “We are aiming for a release before the first half of October so that consumers can try out the features in stores when making their purchase decision.” This schedule could help Apple gain more consumer attention ahead of the holiday shopping season.

The iPhone 16 series’ AI features are likely to pique consumer interest, and Chatterjee explains that “the iPhone 16 series will be the first dedicated AI iPhone,” which could be a compelling reason for consumers to upgrade.

Also read: iPhone 16 could usher in ‘biggest upgrade cycle’ in Apple history, says Dan Ives: Wedbush analyst predicts ‘AI revolution’ by Cupertino

iPhone Users and investors should focus on pricing

Given that Apple has hosted hardware-based events in the past, this year’s focus on AI could create a new pricing dynamic. Chatterjee notes, “The less price-elastic demand for the Pro models will, in our view, give Apple the opportunity to raise prices in a way that passes on the additional unit costs.”

Investors will be watching closely how Apple handles potential price increases, especially if AI becomes a core feature. Pricing is expected to be a major focus for both users and investors at the upcoming product launch.

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