The cheaper iPhone's specs are said to be comparable to the smaller iPhone 4S model, which syncs up with what we have heard about the iPhone Mini.
While the low-cost smartphone may have a less advanced display and processor, the iPhone 5S is rumored to double its predecessor's pixel count to almost 1.5 million.
'We haven't so far'
This iPhone Mini news comes at the same time Apple CEO Tim Cook said his company decided against releasing multiple smartphones at once.
"We haven't so far," said Cook at the to All Things Digital in response to a question about why there aren't a range of new iPhone models out every year.
"It takes a lot of work, a lot of really detailed work, to do a phone right, when you manage the hardware, software and services around it."
"We've chosen to focus our energy on getting those right. And we've made the choices in order to do that. So we haven't become defocused [by] working on multiple lines."
Cook's "so far" comment leaves the door open to Apple making multiple iPhone models simultaneously in the future, just as the company did with the iPod years ago.
All iPhones on September
The iPhone 5S and rumored iPhone Mini are expected to start mass production in June and be released in September.
Although a low-cost iPhone has been predicted before every smartphone-focused Apple press conference in recent history, 2013 may be the year the rumors actually pan out.
- Between now and the new iPhone launch, read our WWDC coverage for more information on Apple's upcoming computer hardware announcements.
Get daily insight, inspiration and deals in your inbox
Get the hottest deals available in your inbox plus news, reviews, opinion, analysis and more from the TechRadar team.