Prices for the iPhone are relatively inelastic, though have become more elastic over time. The most important reason why iPhones have inelastic pricing is the brand loyalty many customers feel toward Apple products in general and the iPhone in particular. In years past, customers have camped out in front of Apple stores in order to purchase the newest edition of the iPhone.

The loyalty of iPhone customers has even somewhat insulated Apple against substitute goods of equal quality, such as Samsung Android and Google Pixel phones. Further reinforcing brand loyalty is the entire ecosystem of Apple products that interact with the iPhone, such as Airpods, Macbooks, iPads, and the Apple Watch. Switching brands would mean having a phone that no longer seamlessly interfaces with these products.

Another determinant is the necessity of a cell phone in the twenty-first century. Since smartphones generally have a life expectancy of one to two years, consumers of such devices are likely to be repeat customers. The pace at which Apple releases new phones coupled with the status of having the latest model phone helps to increase the rate at which customers buy new phones.

Probably even more of a factor in driving demand is the cycle of subsidized iPhone upgrades and trade-ins offered by Apple and many wireless carriers. Since the cost of the phone is paid for in part by someone else or amortized over a long period of time, the cost of a new iPhone is a not a significant portion of many customers' incomes.

iPhone pricing is more elastic than it used to be. When the iPhone 4 was released in 2010, the iPhone had practically become a Veblen good, with customers willing to lay out top dollar for a product that at once offered tremendous utility and advertised status. As subsequent models have been released, however, the phones have boasted fewer new features. Screen size, battery length, processor speed, and camera resolution have already reached relatively high levels of quality, so customers are not as likely to feel they are missing out by holding off on an upgrade they may view as an unnecessary expense. New features, like facial recognition, similarly leave many customers less enthused than in years past. Apple has also, ironically, provided an array of substitutes for its flagship model by offering multiple cheaper models each year.

While price elasticity may have reached a temporary limit, the variety of products Apple offers and the value of repeat business still allow the tech company to maintain higher overall revenue, outperforming most competitors in the premium smartphone market.