Apple Inc.’s  (APPL)  much-anticipated iPhone 8 is coming in about two weeks but with a price tag around $1,000, it’s not clear how many people will be clamoring to get their hands on it. While Barclay’s thinks a $800 price point is way more attractive to consumers, it laid out in a research report how the Cupertino, Calif., company can entice consumers to spend the extra $200.

Hint: it’s all about bundling.

“Considering consumers' sensitivity to the price gap, we explore how Apple could offer purchasers of [the] iPhone 8 a free subscription bundle of 1-year of Apple Music and 1-year of 200GB iCloud storage," wrote Barclays analyst Mark Moskowitz in a note to clients that was covered by Barron’s. "Such a move could make a $1,000+ iPhone 8 seem more within reach, with the $156 in services serving as quasi-discount or rebate, and the bundling also could generate bigger subscription revenue streams if users renew after year one." Moskowitz, which has a equal weight rating on Apple said a survey earlier in August shows 36% of respondents would buy a iPhone 8 for $800 compared to 18% that would spend $1,000 on the new device.  (See also: Apple iPhone 8: Leak 'Confirms' Price of $999.)

More for Your Money?

On Sept. 12, Apple will put all the rumors to bed when it rolls out the new iPhone 8 as well as two models that are updates to the current iPhone 7. The new smartphone is expected to be equipped with a large OLED screen with rounded corners, 3D sensing and face-recognition technology. A virtual home screen button and selfie cameras are also rumored to be part of the device. (See also: An Inside Look at Apple's New iPhone.)

In addition to getting more consumers to purchase the iPhone 8, the analyst estimated it could generate an additional $9.8 billion in revenue for Apple in 2018. Moskowitz is assuming iPhone unit sales will come in at 224 million, but with the mix shifting more to the $1,000-priced phones it will result in a 7% increase in the average selling prices for all iPhones to $710. That’s higher than Barclay’s current estimate of $666. “We estimate incremental profits generated from higher iPhone 8 sales could outweigh additional costs, achieving gross profit accretion of $1.3Bn, despite 1.8 pts of margin % dilution. This would translate into $0.03 in EPS accretion in year 1 but much higher accretion in year 2 through recouped services revenue if users decide to renew,” the analyst wrote in the note.

 

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