The price of the iPhone went up..... along with everything else

Along with the launch of the new Macbook and Apple Watch, Apple has quietly increased the price of the iPhone in Canada.  Each model is now $90 more to buy unlocked without a contract.  For those who have noticed, it stings a bit.  Many have accused Apple of raising prices simply because they can.  While you will get no argument from me that raising prices is never good for consumers, there are legitimate reasons for this, and unfortunately there is little we can do about it.


The Canadian Dollar is at 80 cents against the US Dollar.  That is a fact.  Since 2007 we have been used to a Canadian Dollar that is at or close to par with the US dollar, and that has generally brought price equality.  With many products, especially those in the electronics space, we got used to seeing and paying the same price those in the US have paid.  It wasn’t always like that.  In the early to mid 2000’s when our dollar fell to as low as 61 cents against the US dollar, prices were much higher for goods compared to the same product in the US.  But our memories are short, and we often forget that.


Price increases suck.  No one wants to pay more.  But the simple fact of the matter is that any company that sells products in both Canada and the US would be making 20% less on a product sold in Canada compared the the US.  And even for a company like Apple, that is not a sustainable model.  It is unreasonable to expect a company to sell a product for less in one place than another.


There are practical reasons for this as well.  As an example, if Apple continued to sell the iPhone for what amounts to a lower price in Canada, not only would they be sacrificing income in Canada, they would also risk US customers coming to Canada to purchase the iPhone at what would essentially be a discount for them.  So Apple would also be sacrificing sales in the US at the higher prices, which would further reduce their income.  That is just one example.


The biggest complaint I also hear is that companies are quick to raise prices and slow to lower them.  While there is a bit of truth to this, the simple fact is that big companies can, and usually do, absorb those differences in both ways for as long as they can get away with without changing the prices.  The Canadian dollar has been sitting below 90 cents US for over a year, and while we saw some small price increases, generally companies like Apple and Microsoft continued to sell products at or very close to the same as they were sold in the US, meaning they were already taking upwards of a 10% loss in revenue compared to the US product. That went on for nearly a year before prices started to creep up.


The fact is that until the Canadian Dollar rises back to near par with the US dollar, Canadians will be paying more for products than those in the US.  It sucks. No one likes it. But it is just a fact.  It isn’t Apple’s fault, it isn’t Microsoft’s.  Even for companies the size of those two, there are factors beyond their control.