You do know that works extends to beyond the western countries and most of the world population lies in the Asian region where you have to buy stuff with cash upfront?
Even if you buy them on contract even then they turn out to be more expensive than other flagships but obviously the contract makes it much more easier to buy this stuff.
IPhone may not be considered a luxury item in the more civilized societies but in our part of the world it is 100% considered a luxury item. 99% percent of the people in Pakistan buy it for being an iPhone, if you take off the iPhone tag and put it on an s4 then all the people will buy it without question. You may not agree to this but it's a fact.