The 128 GB iPhone 8 is $499 with an A11.
They don't have to sell a new iPhone SE for less for $499. I'd pay that for it. Small is a premium. But would selling it at $399 really kill their margins?
Edit: the iPhone 8 64GB refurb pricing is now $379. That's a pretty good deal:
https://www.apple.com/shop/product/FQ6K2LL/A/Refurbished-iPh...