In 2015 you’d have paid paid $850 for what was then the most expensive ‘standard’ sized iPhone you could get - an unlocked 128Gb iPhone 6S. Right now a 128Gb iPhone XR, with dramatically better specs and camera, and nearly 50% bigger screen, sells in multiple colors for $799.
The popularity of the $999 iPhone X simply showed Apple that there were people willing to pay more for their premium phones. People don’t have to buy them but the value proposition is there if you look at the improved specs people care about (eg camera). The cheapest phone Apple now sells is the iPhone 7, for $499. Respectable option.
The role of a phone has also expanded to “my primary compute device” for a lot of people (a reason for bigger and bigger screens) - those people are actually getting a really good deal if they can replace a tablet, laptop, and phone with a single device, even if that single device doubles in price. And if Apple is no longer selling them the tablet or laptop component, they for sure want to make money on the phone side.
To me the puzzling element is what they hope to sell in India, a market they’ve had trouble cracking, and which has a smaller middle class than China. A lot of people thought an SE2 or XR would be a lower-cost phone to help sell to emerging markets. Instead Apple seems to be focusing right now on increasing margins with higher-quality phones stuffed with the latest, fastest, multicore processors and co-processors.
The iOS ecosystem is deservedly ‘sticky’ yet it’s still surprising to me they’re conceding so much of the low to mid range market to Android right now.