Watch Apple's margins amid iPhone pricing changes

Among the data expected from Apple late Tuesday, tech investors may want to keep their eye on two financial trends that are closely related.

One is the impact on Apple's profit margins from the shift to an installment pricing model for the iPhone, now that major U.S. wireless carriers are moving away from subsidized two-year smartphone contracts.

The second is whether Apple can protect the pricing premium on its most important product, as more consumers are signing up for these monthly plans, which don't require large, upfront outlays supported by the carrier subsidies of the past.

As of December, Apple had managed the trend with little to no impact on its bottom line. Apple, for that quarter, its fiscal Q1, was able to slightly boost its gross profit margin.

Just as encouraging for Apple stock bulls, the iPhone's average sale price also ticked higher, even as year-over-year sales growth slowed to a crawl at 1%.

That's a strategy that puts product innovation above market share and has worked well for Apple shareholders since the iPhone first came out in 2007.

Apple, however, is expected see year-over-year sales drop of 10% for the March quarter.

Apple earnings preview: Softer sales ahead

That's the worst drop since the iPhone became the cornerstone of Apple's business, and it comes as the market the iPhone is sold into is changing.

In recent months, AT&T has joined T-Mobile in offering new plans without multi-year contracts.

Sprint, meanwhile, has started to charge for its iPhones by the month.

As exclusive annual wireless contracts become a thing of the past, Apple is adapting its pricing strategy, too.

In the past, Apple has published prices ranges usually in $100 increments, for example from $399 to $699, based on features like storage capacity.

On its website this week, Apple has two pricing options. The iPhone 6s is offered for either $32.41/month, as part of an iPhone upgrade program, or with an option to "pay now from $649."

Similarly, the iPhone 6s Plus is priced at $36.58 per month or $749 at Apple.com.

So like it's wireless partners, Apple is becoming a bit less of a smartphone seller and more of a smartphone leasing company.

That's not a bad idea for a company with $216 billion in cash, as of December.

But future iPhone sales supported by monthly financing may not be as profitable as those funded by the carrier subsidies of the past.

Unless, that is, Apple can continue to charge more for its phones than most rivals, even as global smartphone market growth slows to the high single digits.

That will require superior innovation.

The impact of these trends in the first calendar quarter will reveal itself in Apple's  gross margin and average iPhone sales price.

A rise or drop in those financial metrics, and the magnitude of any year-over-year change, should provide clues to Apple's long-term iPhone profit margins in a changing wireless market.

John Shinal has covered tech and financial markets for more than 15 years at Bloomberg, BusinessWeek,The San Francisco Chronicle, Dow Jones MarketWatch, Wall Street Journal Digital Network and others. Follow him on Twitter: @johnshinal.