How Apple prices its products: 3 rules to understand
Apple sells a product for a high price. This is not new. Here are some things to keep in mind about the companyu2019s pricing philosophy.
www.macworld.com
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Apple pricing regime explained
- Thread starter Tulani
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www.macworld.com
Good article.
I have to say I was shocked when I heard about the $549 headphones yesterday. But, just out of curiosity I went to the apple store to see availability. Not sure what color I selected, but they weren’t going to be shipped until March 5-19.
Apple apparently knows what they’re doing.
EDIT: Just checked the apple store again. All colors are showing 12-14 weeks on the new AirPods Max, which, according to my teenagers, aren’t even airpods.
I have to say I was shocked when I heard about the $549 headphones yesterday. But, just out of curiosity I went to the apple store to see availability. Not sure what color I selected, but they weren’t going to be shipped until March 5-19.
Apple apparently knows what they’re doing.
EDIT: Just checked the apple store again. All colors are showing 12-14 weeks on the new AirPods Max, which, according to my teenagers, aren’t even airpods.
AirPods Max see first discount in today's best deals, plus $150 off latest iPad Pro, more - 9to5Mac
Today’s best deals include the first discount on Apple’s new AirPods Max, along with $150 off the latest iPad Pro,...
9to5mac.com
Good article but that is on the belief that you will budge...
I won't. Price is always want i go by regardless. Apple makes produces for all, and that's fine, but if I can't afford it, i'll turn elsewhere. I have no problem with that, even if i am an Apple user.
Others may not always be in the same "water off a ducks back" kind of position.
I won't. Price is always want i go by regardless. Apple makes produces for all, and that's fine, but if I can't afford it, i'll turn elsewhere. I have no problem with that, even if i am an Apple user.
Others may not always be in the same "water off a ducks back" kind of position.
agree. there are definitely some hardliners even going by this site
but i also tend to weigh my options.
there are other top products by other companies competitively priced
Not so much.
Sure, silly direct comparisons between Macs and $500 No-name PC bricks do pop up here from time to time - but most of the major PC and phone manufacturers now have "premium" ranges starting at ~$1000 that bear comparison with Apple products - and its quite common for those to offer considerably more bangs-per-buck and/or better/cheaper RAM and SSD options than Apple.
(Right now, Apple aren't doing too badly, esp. at the 13" end - the M1 puts the entry level Macs in a different league, and 8G of LPDDR RAM and 256GB SSD soldered in seems to be the new normal in the PC world too).
Then, sometimes, Apple are expensive compared to Apple: The great price hike on the 2016 15" MacBook pro range wasn't well received even by those of us watching the launch with credit cards in-hand. The entry-level 2019 Mac Pro represented a huge price hike: from a $3000 headless Mac that took up performance from where the iMac left off to a $6000 headless Mac that got thrashed by a fully specced iMac unless you spent thousands more on upgrades.
Also - Apple has been known to get it wrong on pricing & do an about turn: that $1099 MacBook Air that the article mentioned lasted less than a year before Apple replaced it with a $999 model (below the magic $1000). The 16" MacBook Pro kept the same price point as the 15" but offers significantly more for the money. Maybe whining about price does do some good?
It will be interesting to see how the prices of the "pro" Apple Silicon machines pan out. The first M1 machines have kept the same prices as the entry-level Intel models they replaced (and, aside from the M1 itself, pretty much the same specs & options) - but they had to convince a skeptical world that Apple Silicon could kick intel butt. That's now kinda proven - and those machines now thrash the previously-competitive PC options - so will Apple think they can sneak in a price hike?
Absolutely - and you should feel free to say so online and criticise Apple's prices. If their prices are turning away interested customers, that's a fair topic of discussion. "If you don't like Apple's prices don't buy it" is not a valid argument.
For one thing - selling computers is not like selling bags of sugar where your customers are free to go to the seller with the cheapest price-per-kilo. Computer buyers have a significant investment in software, training and experience in the platform they choose and can't just switch on a whim. Apple is well placed to try and capitalise on that, and they do: the Mac Pro (and lack of a proper mid-level headless desktop) are a case in point. However, long-term, that leaves the MacOS platform as a slowly evaporating pool as the users gradually take on new workloads that let them switch to better value hardware until, one day, that pool is too small to attract software and hardware developers and rapidly dies. Until then, though, extracting ever higher prices from loyal users looks great on the quarterlies. So it's important to hold them to account.
The guy that wrote that article need a history lesson.
"It’s hard to imagine a cheap plastic MacBook—and while Apple would be applauded for releasing it, would it really benefit Apple’s bottom line? And how much would it erode its image?"
It's not hard to imagine, I owned one, as did most people on this forum I'd guess.
"It’s hard to imagine a cheap plastic MacBook—and while Apple would be applauded for releasing it, would it really benefit Apple’s bottom line? And how much would it erode its image?"
It's not hard to imagine, I owned one, as did most people on this forum I'd guess.
There is a big chunk of cost that previously went to Intel that will disappear. They can either use that to increase profits per unit or try and sell more units at the previous margin. My guess would be the second as it helps other parts of the business, in particular services.
The M1 isn't free - Apple spent a truckload of R&D money developing it and tooling up to manufacture it, and they're going to want to see a return on that investment, and they'll need to bankroll more R&D to keep the design up to date. Intel also have an economy of scale advantage (which is a massive factor with semiconductor manufacture).
Whether it saves short-term money for Apple to design and make their own processors rather than buying chips from Intel is something only Apple's accountants know - but it is far from a certainty.
More powerful Apple Silicon chips will also cost serious money to develop, and Apple will sell them in smaller quantities than the M1. There's an interesting question as to whether it will ever be economical for Apple to produce a Xeon-killer to match the 28 core jobs in the higher-end Mac Pros, which will sell in very small numbers.
There are already reports suggesting they are saving money even on the bottom end of the market. There is a huge chunk of Intel profit in the high end devices for them.
Of course they have R&D costs but so do Intel. If they can write it off against enough devices it isn't a problem.
A lot of this is speculation of course but there is one thing we do know. That is Apple told us they will be putting their own processors in the whole Mac range. They wouldn't have announced that unless they were confident they could do it.
- I think the MacWorld article can be boiled down to a single sentence: Apple has positioned itself as a luxury lifestyle brand. Think Canada Goose, Four Seasons, Rolex. People don't buy these products only for their functionality; the high prices and "exclusivity" are a major part of the appeal for many.
- From a revenue reporting perspective, switching away from Intel can have benefits for Apple. First, fees paid to Intel probably are counted against Apple's income all at once, as soon as the fees are incurred (in other words, as an expense). But a lot of Apple's spending on Apple Silicon can be spread out, for accounting purposes, over long periods of time (in other words, as capital expenditure or R&D). Second, Apple already has a lot of infrastructure in place for chip development, thanks to iOS. Using Apple chips in Macs allows Apple to allocate the associated costs across a broader base of divisions and products. Both of these revenue reporting effects can give Apple the ability to massage the published profitability of either the entire company or selected divisions, which will influence Apple's stock price.
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