Apple isn’t just counting on customers to keep buying iPhones. It also expects them to keep paying every month long after they’ve bought one.
While Apple built its reputation selling cutting-edge devices, its fastest-growing profit engine has become Services, the business that keeps generating revenue after customers leave the store.
Despite its name, Apple’s Services segment is about far more than servicing devices.
Apple’s Services segment is the catch-all for all the ways the company makes money after a device is already in a customer’s hands. That includes the commissions the company gets when you pay for something in the app store, or buy an in-app service from a downloaded app.
It also includes subscriptions like Apple Music, TV+, and iCloud+, AppleCare warranties, the multibillion-dollar licensing payment Google makes to stay Safari’s default search engine, advertising, and Apple Pay.
It’s a business that might not get a lot of media attention, but it provided roughly a quarter of revenue in fiscal 2025. More importantly, Services carries a gross margin north of 75%, more than double the 36% Apple earns on hardware, according to Apple’s fourth-quarter earnings release.
Now, Apple has made a bold play to increase that revenue by raising the prices on a number of its subscription services.
Apple bets you won’t cancel
Like many Apple customers, I have a bundled Apple One Family subscription.
Every Apple One tier includes Apple Music, Apple TV, and Apple Arcade, plus iCloud+ storage. The tiers differ in storage amount, whether you can share with family, and, at the top, two extra services.
- Apple One Individual runs $19.95/month and includes Apple TV, Apple Music, Apple Arcade, and 50GB of iCloud+ storage, for a single user.
- Family is $25.95/month and includes the same services but bumps storage to 200GB and lets you share with up to five other people via Family Sharing.
- Premier is the everything tier and adds the two services the lower plans don’t have: Apple Fitness+ and Apple News+, on top of 2TB of iCloud+ storage, shareable with up to five other people.
Source: Apple
Apple has raised the price of the Family and Premier Apple One tiers, while the Individual offering’s price has not changed.
- Individual: $19.95 (unchanged)
- Family: $27.95 (up from $25.95)
- Premier: $39.95 (up from $37.95)
Apple did not announce the price change. Instead, it just changed the pricing on its website.
The company also quietly raised the cost of its Apple Music subscriptions:
- Individual: $11.99 (up from $10.99)
- Family: $19.99 (up from $16.99)
- Student: $6.99 (up from $5.99)
“As a result of rising licensing costs, Apple Music is increasing its subscription price beginning today,” the company shared in a statement to 9to5Mac.
Apple’s move follows Spotify’s own subscription price increases earlier this year, narrowing the pricing gap between the two streaming rivals. Even after the latest increases, Apple Music still costs less than Spotify’s standard individual plan.
Services have become Apple’s revenue driver
RTM Nexus CEO Dominick Miserandino thinks Apple raised the price of Apple Music along with the One bundle price for a strategic reason.
“By jacking up the price of Apple Music, they make the Apple One bundle look like a bargain by comparison, practically forcing you to upgrade. It’s sad, but because of the way the digital platforms are working, more iPhone users are going to be forced into this situation of paying for subscriptions,” he told TheStreet.
The increase, assuming it does not cause people to drop their subscriptions, should add to Apple’s bottom line.
“Services are no longer just a supporting character inside Apple. It has become a substantial portion of revenue and represents an even bigger share of profits — and it’s helping the company turn its massive device footprint into repeatable, higher-margin revenue,” according to The Motley Fool’s Daniel Sparks.
Apple’s Services revenue stabilizes the company.
Apple’s growing Services revenue makes it a more stable company that’s not as dependent on product replacement cycles.
“This, in turn, improves Apple’s earnings potential and helps the tech company be less dependent on iPhone, which accounts for more than 50% of revenue,” Sparks added.
Evercore ISI analysts believe that investors have ignored Apple’s Services business by focusing too much on its short-term prospects as a hardware company.
“The firm recently raised its price target on Apple stock to $365 while maintaining an ‘Outperform’ rating, citing the company’s growing ability to monetize its massive installed base of more than 2.5 billion active devices through subscriptions, payments, cloud services, advertising, licensing, and artificial intelligence (AI)-driven offerings,” according to Yahoo Finance.
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The company set a number of records in its most recent quarter with Services leading the way.
“Apple Inc. is proud to report $111.2 billion in revenue, up 17% from a year ago and a March record, which was above the high end of our guidance range despite constraints. Customer enthusiasm for iPhone has been extraordinary, with revenue growing 22% year over year to achieve a March record. Services reached an all-time revenue record, growing 16% from a year ago, while EPS set a March record of $2.10, up 22% year over year,” the company shared in its second-quarter earnings release.
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Apple also recently raised hardware prices
Apple raised prices on June 25, according to TheStreet’s Aparajita Chatterjee. The company raised prices on Macs and iPads, but has excluded the iPhone for now.
The company raised prices on several Mac and iPad models by $200 or more, with the base MacBook Air rising $200 to $1,299 and the base MacBook Pro rising $300 to $1,999, according to the Wall Street Journal.
The iPad Air and iPad Pro also saw price increases, according to the report.
The increases come after Apple CEO Tim Cook told the Journal that price increases were becoming unavoidable due to higher costs for memory and storage chips.
It’s likely that Apple will wait until its next iPhone release before it raises prices on its phone. It’s also possible that the company is willing to sacrifice margins on its phones in order to keep its customer base intact in order to support its Services revenue.
Analysts expect an increase, but disagree on the amount.
Some investors and consumers have worried that Apple could eventually need to raise iPhone prices by $200 or more to offset higher component costs.
Bank of America recently raised its assumed price increase for some iPhone models, as covered by TheStreet.
However, JPMorgan analyst Samik Chatterjee reportedly sees a less dramatic outcome.
According to Seeking Alpha, Chatterjee expects the iPhone 18 series to launch with a more modest price increase than some press estimates, closer to about $50 or a mid-single-digit percentage range.
There are over 150 million active iPhones in the U.S., making it a core part of American life, according to Statista.
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