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Apple's 16GB iPhone 5C will retail for $549 off-contract

The 32GB will sell for $649 without a contract, making the 5C not quite the budget phone many expected.

Now playing: Watch this: iPhone 5C makes its debut
Apple's iPhone 5C will start at $549 for customers without a contract, making the device less of a budget than hoped.

The smartphone, which comes in five colors and is made of plastic, will sell for $549 for a 16GB version or $649 for 32GB. With a two-year contract, the price drops to $99 and $199, respectively.

The unsubsidized pricing only gives users a $100 discount from the iPhone 5S contract-free pricing. For the 16GB version of that device, users pay $649 off contract.

The launch comes as Apple loses market share to rivals such as Samsung. As growth in the high-end smartphone market slows, Apple must find ways to attract new buyers, as well as expand into lower-priced phones. It's unlikely that $549 will be cheap enough to address the low end of the market in places like China. Apple, however, will hold an event in China later this week, where it is believed that Apple will announce a partnership with China Mobile, the world's biggest carrier.