There are some pretty credible rumors out today indicating that the new phone from Google will start at $650, just like the iPhone and Galaxy S7. Many Google fans are upset by this, and I don't entirely blame them. The Nexus 6P currently retails for $499, so a $150 jump in price is not exactly what Nexus owners were hoping for. 9to5Google has a good roundup of angry tweets about the news:

https://twitter.com/jacobvarner14/status/777957561865830400

https://twitter.com/Malkythera/status/777957473843941376

But I think this could be a good change. The Nexus line I feel has always fallen in a weird middle ground on the smartphone price spectrum. On the only end you have premium phones like the iPhone, Samsung's Galaxy and Note lines, and all the other flagships from LG, HTC, and Sony. These phones have all the latest specs, including amazing cameras, speedy CPUs, and impressive build quality. You paid for these features though, as these phones tend to be at or around $650. Because if their steep prices, people tend to buy these phones on some sort of plan with their carrier. In all likelihood, they pay 1/24 of the cost every month for 24 months or until they upgrade to a new phone.

The other end of the market is where phones like the Moto G and a million other low end, but decent Android phones have carved out the budget space. These are phones with lower specs that basically are "good enough" for many people. One of the big appeals of these phones is that they are cheap enough where many people can buy them outright and own the phone without paying it off over time.

The Nexus phones have always hung out in the middle of these two spaces, and I think it's made it hard for people to justify buying them. At $500 for the Nexus 6P, and even the $349-$399 pricing of the Nexus 5X puts it just out of reach for most people to buy outright. They're neither as affordable as many other good options, nor are they the best at anything compared to other Android phones people are familiar with. Nerds like us like them because they are the only phones that run stock Android, but normal people couldn't give less of a shit about that.

The difference between a $500 Nexus and a $650 Galaxy S7 is $6.25 per month when making payments to your carrier¹. That's going to cost you more over time, but it's really easy to legitimize $6 per month. Besides, if you're going to have to pay off a phone for 2 years, it may as well be the top of the line one that costs a nearly imperceptible $6 more.

Unrelated but also important, Google needs to do something to get carriers to treat their phones better in stores. If the sales person at Verizon never even shows a shopper the Nexus or Pixel phones, then they may as well not even exist. But that's a whole other issue.

Bottom line: the current Nexus phones are too expensive for people to buy outright and they're not powerful/feature-rich to keep up with the other phones you buy on a payment plan. They are stuck in an awkward middle ground.