The iPhone isn't exclusive any more, but everyone still views it as an expensive device. I had a friend (non-iphone owner) borrow my iPhone 5 for a phone call and she came back caressing the phone while returning it, saying she doesn't feel comfortable using my phone because it's so expensive. Yes, I paid retail for it but as far as she knows it was $199. iPhones aren't significantly more expensive than comparable android phones, so I'm not sure why people still see iPhones as so expensive.
When $649 is base price without being locked into a contract for only 16 gig its is a little steep. Monthy bills are in the range of $100 - $200 usually so $200 x 24 = 4,800 for 2 years. + the 199 = 5,000. That is a lot for a phone. That only factors in subsidized pricing on the lowest model.