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Best Buy Stops Some Sales of New iPhones After Pricing Backlash

  • Company still sells iPhone X and 8 on monthly payment plans
  • Retailer previously sold Apple’s latest iPhone at $100 premium

Best Buy Co. said it stopped some sales of Apple Inc.’s iPhone X and iPhone 8 after consumers complained about the retailer charging a $100 premium on the already expensive smartphones.

The company, one of Apple’s key retail partners, still sells all iPhone models via carrier installment plans that let customers pay for the devices over several months. The price of these payment programs are the same as the monthly plans offered directly by carriers like Verizon Communications Inc. and AT&T Inc. and similar offerings on Apple’s website.

Last week, when users went to Best Buy’s website to purchase an iPhone X at the full, upfront price, Best Buy charged $1,099 and $1,249 for the two configurations. Apple’s pricing is $999 and $1,149.

“Although there was clearly demand for the un-activated iPhone X, selling it that way cost more money, causing some confusion with our customers and noise in the media,” Best Buy spokeswoman Danielle Schumann said. “That’s why we decided a few days ago to only sell the phone the traditional way, through installment billing plans.” Apple didn’t comment on Best Buy’s move when asked about it on Tuesday.

Last week, consumers took to Twitter to complain about the extra charge. “Never buying from you again,” one Twitter user wrote. “Charging $100 premium due to demand is treating your customer like dirt.”

In a statement posted Tuesday to its website, Best Buy explained its original iPhone pricing strategy.

“Many customers told us they like to buy a phone that is not ‘activated,’ meaning it does not come with a carrier contract,” the company said in the statement. “This may be because they broke a phone and want to replace it or are on a company plan and not allowed to upgrade. To accommodate this, we gave consumers the choice to buy the iPhone X through installments plans with carriers or buy it outright, unactivated.”

Best Buy previously said the $100 premium was intentional because offering different purchasing options for iPhones “has a cost.” The retailer gets payments from carriers when it sells phones that are already set up to work on the carriers’ networks. It doesn’t get that money when devices are sold without carrier activation. Still, Apple, carriers and some other retailers stick to the official pricing. Best Buy still sells older iPhone models, including the iPhone 7, at a $50 premium, according to a check of its website on Tuesday.

Walter Piecyk, an analyst at BTIG LLC, said it was “odd” that Best Buy wouldn’t want to offer as many iPhone X options as possible to drive store traffic, even if that didn’t generate a profit.

“We tried something designed to offer choice but instead created confusion. We may try again at some point, only this time with better execution,” Best Buy added in its statement.

Preorders for the iPhone X started on Oct. 27 and the device goes on sale in stores on Nov. 3. Apple has said that preorders have been “off the charts.”