Apple Faces Criticism as iPhone Prices Trail Inflation

Needham noted that Apple's (AAPL, Financials) pricing approach for the iPhone has hurt shareholder value by not keeping up with inflation. This has put pressure on the firm.

Laura Martin, an analyst, says that Apple has only raised the prices of each iPhone model once since 2019, which means that the smartphones are really cheaper in constant dollars.

For instance, a basic iPhone that cost $799 in 2020 was worth around $634 in 2025 when you take inflation into account.Needham determined that if Apple had raised the prices of iPhones every year to keep up with inflation, they would have made 13% more money between 2019 and 2025. The company dubbed Apple's approach "value-destructive," saying that it doesn't have any new features that would make increased costs worth it.

Wall Street usually says that pricing power is the capacity to raise prices faster than the rate of inflation. Martin remarked that under that standard, Apple has not done well. The iPhone is still the most important part of Apple's iOS ecosystem, thus keeping prices in check is very important for long-term investment returns.