Apple’s Secret iPhone Discount

By Ewan Spence  for Forbes Magazine.

Do you fancy picking up your next iPhone with a hundred-dollar discount? Or would you rather feel the security of buying your next smartphone direct from Apple? Now you can do both, as Apple puts its refurbished iPhone 6 and iPhone 6S models on sale in the Apple Store with one-year warranties and the same level of support as a full-priced handset

Apple CEO Tim Cook speaks during a product launch event at Apple headquarters in Cupertino, California (Photo: Josh Edelson/AFP/Getty Images)

The Apple Store’s refurbished hardware section has been a quiet secret for many years. It’s never really been pushed, but it’s well-known enough that anyone searching for deals on Apple hardware should stumble over it. That discovery of a ‘hidden section’ on the website creates a thrill of the chase and gives Apple another opportunity to build a positive relationship with a customer.

Over the years the refurbished section has been especially popular with consumers looking to buy a MacBook laptop. Although the machines are generally one or two generation behind, they go on sale with a full warranty from Apple and are eligible for Apple Care. They also carry a significant discount of around ten to fifteen percent.

Bringing the iPhone into Apple’s refurb market allows Apple another chance to capture the budget focused consumers without having to rely on third-party resellers or the second-hand market.

It also gives Apple an outlet for the iPhones that have been exchanged under the iPhone Upgrade Program. This program started last year and allowed consumers to buy a new iPhone with twenty-four monthly payments. After one year they are presented with the option to extend the payments for a further twelve months and trade in their handset for the latest device.

I would presume that the first wave of users have now traded in for the iPhone 7, leaving Apple with a rather large number of older handsets that can be reconditioned and put back on sale as returned and refurbished stock. They could be stripped for parts or to recycle the materials (and Apple has a robot to do just that), but there’s a bigger return by selling these units back to customers with a discount on the list price by around eight to a hundred dollars, there’s another chance to create a special relationship with a customer, and there’s another chance to bring more users into Apple’s ecosystem.

You can browse the stock levels and buy your refurbished iPhones online at the Apple Store.

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