The Cupertino giant, Apple Inc (NASDAQ:AAPL) always makes it customer more surprised and also keeps them to engage with its excellent plans. But, the current plan of Apple will boost the sales of new iPhones and also expected to boost the share price to jump over 50 percent.
Recently the company has announced a new program called as iPhone Upgrade Plan, which allows the customer to exchange their old iPhone, and they can replace the new device for paying $32 for 12 months. In addition to that, without exchanging the device, one can buy a new iPhone device by paying $32 per month for two years of the period.
Apart from iPhone 6S and iPhone 6S Plus, Apple has unveiled a new 12.9 inch iPad Pro and also revamped Apple TV. Yes, September 9 Apple Event is one of the milestones for the company, which rally up the share values in the Wall Street.
Amit Daryanani, an analyst with RBC Capital Markets says,
“You essentially create a certain group of your user base that is going to be on a 12-month upgrade cycle,” “You’re taking the stickiness away from the carrier and putting it on Apple’s ecosystem, which is phenomenal,” “When I run the math, this is a very gross-margin-accretive investment for Apple.”
According to him, a typical device comes with a price tag of $700, and the cost of manufacturing the device will be around $350. When the company collect $32 per month, it will collect $384 from the customer in 12 months (which is more than 55% of margin for the device).
In addition to that, the company collects two years used device from the same customer, which will be refurbished and sold for around $500. He added, “The cost of goods sold is [another] $175, for a year-two gross margin of 65%.”
By using this new program, investors will get a peak in their investments and also it will be a catalyst for selling more devices in future for the company.