I’m pretty sure they determine the price upfront and then figure out what bells and whistles they can ship without eating into their margins. Their goal is to hit a certain average selling price across their massive user base when they upgrade their old phones. They are not going to jeopardize that by releasing an attractive cheap iPhone.

For the people who really don’t want to spend a lot, obviously the easiest option is to just buy an older iPhone or keep your phone for longer. My partner doesn’t care about having the latest tech. So first I use a phone for 3 years and then they use it for another 3 years. We essentially get 6 years of life out of it (Apple is good about releasing software updates for 6 years).