Team 5 proposes three iPhone pricing models to increase Apple's profits and market share: 1) A base model at $525, a premium model at $600, and a luxury unlocked model at $800. 2) An alternative model offers an 8GB iPhone for $199 and 16GB for $525, both subsidized. A luxury unlocked model is also offered. 3) Their recommendation is the first model, as it offers a lower-priced option to increase market penetration while the premium and luxury models appeal to status-seeking customers and those wanting flexibility. This three-tier approach balances affordability with exclusivity to maximize profits.