I'd rather pay $799 for a XR with 401 ppi screen than $749 for a XR with 326 ppi screen. I do understand many wouldn't though.
The main problem here is there is too much of a jump in cost between the model lines.
The XR 128 GB is US$799. The Max 256 GB (since there is no 128 GB model) is $1249. That's a difference of US$450 or 56% percent. Seriously, WTF.
Everyone has to make their own choice depending on what they want or have to spend.
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I would say the iPhone 7 is now Apples ‘budget’ offering and the XR is aiming squarely at the mainstream market. I think the XR is beyond their mid tier pricing so it’s difficult to refer to it as ‘budget’ IMO.
It is hard to use the word “budget” on any Apple device but in their marketing the X-RAY is as close as they can get with some of the bells and whistles.