Here’s how Apple could get people to buy a $1,000 iPhone: Barclays

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A customer views a display featuring Apple Watch Nike+ at an Apple Store in the SoHo neighborhood of Manhattan.

Wall Street is expecting Apple will roll out iPhone 8 models at prices above $1,000 later this year.

Barclays believes the smartphone maker can overcome buyer sticker shock by including one-year subscriptions to popular Apple services such as Music and iCloud storage with the more expensive iPhones.

The firm’s survey found that iPhone consumer “buying intention” falls to 18 percent from 36 percent when the price of the device rises to $1,000+ from $800.

“Considering consumers’ sensitivity to the price gap, we explore how Apple could offer purchasers of iPhone 8 a free subscription bundle of 1-year of Apple Music and 1-year of 200GB iCloud storage,” analyst Mark Moskowitz wrote in a note to clients Thursday.

He says offering the subscriptions with the sale of the phone could boost revenue and ultimately boost Apple’s earnings per share.

Moskowitz estimates the free one-year subscriptions of Music and iCloud, worth $120 and $36, will cost Apple $43 and $7 to service.

“Such a move could make a $1,000+ iPhone 8 seem more within reach, with the $156 in services serving as a quasi-discount or rebate,” he said. More revenue could come if iPhone owners decide the renew the subscriptions after one year, he added.

As a result, the analyst predicts the services bundle would boost iPhone 8 unit sales to 64 million in 2018 from his current estimate of 40 million. He also estimates incremental profit of $1.3 billion from the move.

Moskowitz reiterated his equal weight rating for Apple shares and $146 price target, which is 11 percent lower than Wednesday’s closing price.