Not excusing the price, but people these days spend multiple hours a day on their phones. Phones are as important as cars for example. How high prices can go ? Even higher imo People are ready to pay for expensive cars for a better experience and higher "social standing". Phones are not that different in this regard
Nowadays the difference is really marginal for every day use. You are only going to take better photos in marginal low light conditions, if you even take lots of photos, everything else will be pretty much the same experience. I'd argue that we are even in removal of features mode (audio jack, touch id) which is putting off people like me who normally wouldn't mind a high price tag for a smartphone.
There are enough apple fans out there to buy any piece of plastic that apple will sell at the price of gold. But for a wider wealthy and techie audience, I think the value added of spending more on an iphone is becoming hard to justify.