Ok, would I pay $650 for an iPhone 5S...? Well, I just recently did, so yeah, I guess I would. I must confess, though, I would pay $350 for a samsung phone but only the S3 or S4, maybe even the HTC one Glacier Silver, but not Nexus. Please, anything but Nexus!I think the question is would you pay $650 for an iPhone 5S. Not if you think Nexus 5 is worth $350. Stay on topic.
We pretty much know that diehards wouldn't mind paying $650. It's the average Joe that might be looking at switching from a different platform. Or the previous customer that might have to pay unsubsidized pricing in the future. Apple knows that it has an extreme loyal following and will sale to you at any cost.
If your running a restaurant don't you want new customers to eat there as well? Trying to entice your new customers with a $20 hamburger that taste no different than a $12 hamburger is not the answer. And soon those loyal customers are going to save $8 on that hamburger if you don't do something different.