Early adopters of the iPhone 5 may be willing to pay up to three times the price online to own one, according to a University of Warwick economist.
Professor Michael Waterson has just published a study which monitored rocketing sales of the iPhone 4 on internet auction site eBay just after the product was launched in the UK. He is predicting that consumers will once again pay well above the retail price of the iPhone 5, which is expected to be launched in the next few weeks.
Professor Waterson’s study monitored sales of the iPhone 4 on eBay for six weeks after it was launched in the UK. He found people paid between £600 and £1,500 on eBay for the handsets, which normally retailed at around £499 to £599 in stores. Professor Waterson said prices appeared to be driven up by consumers who wanted the ‘snob value’ of being an early adopter of the new iPhone..
Higher prices were paid for phones which were not locked to a particular mobile network and also if the seller was willing to send the phone outside the UK, possibly to a country where it had not yet been introduced.
Professor Waterson said: “We monitored all eBay transactions on the iPhone 4 for six weeks from 24th June last year when it became available in the UK. The extent of eBay activity on this product was extraordinary, with total transactions amounting to around £1.5m for 2,183 sales.
“For the 16GB version of the phone, 98% of sales completed at a value in excess of the listed retail price of £499. The average price was £640.35 and the maximum achieved was £1,180. For the 32GB version of the phone, 97% of the sales completed above the listed retail price of £599. The average price was £778.73 and the maximum price achieved was £1,551.”
Professor Waterson said although the iPhone 4 was still officially on sale in stores at this time, there was a delay in getting stocks to retailers.
He added: “The product was in short supply at this time and so it's probable that demand was influenced by immediacy or ‘snob value’. There are rumours that the launch of the new iPhone 5 will be announced next month and it will be fascinating to see what happens to the eBay activity around that product.
“It seems we are willing to pay well over the retail price for the kudos of being one of the first people to own the latest piece of technology. This study suggests technology is the one area where we are not prepared to tighten our belts in the current financial climate.”
Notes to editors
The working paper, ‘eBay and the demand for the iPhone 4’ by Michael Waterson and Chris Doyle is available at http://www2.warwick.ac.uk/fac/soc/economics/staff/academic/waterson/publications
To arrange an interview with Professor Waterson, please contact Kelly Parkes-Harrison, Press and Communications Manager, University of Warwick, firstname.lastname@example.org, 02476 150868, 07824 540863