The intuition sounds logical: manufacturing gets better, so consumer prices should fall. In practice, premium tech categories moved toward value-based pricing, not pure cost-plus pricing.

Why flagship phones stay expensive

Top-tier iPhones are priced like status software-hardware bundles, not just bill-of-materials outputs. Camera systems, custom silicon, ecosystem lock-in, and brand positioning preserve premium pricing power.

How AI pricing got anchored around $20

When ChatGPT made a mainstream $20 monthly plan familiar, it became a psychological anchor for AI subscriptions across the market. Even unrelated AI products started clustering around similar tiers because customers had a pre-trained willingness-to-pay reference point.

  • Cost improvements in production do not force lower consumer prices if perceived value rises faster.
  • Subscription framing makes recurring pricing feel normal in categories that used to be one-time purchases.
  • Market expectations, not just component costs, determine price ceilings.

Technology prices are now largely expectation-driven. Cost efficiency helps margins first, and only sometimes helps consumers.

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