I recently came across an article in Computer World that explained so much to me about the reasoning behind Apple's pricing and hardware configurations. This is probably old news to seasoned Apple consumers, but as a n00b, it was fascinating to me.
Key Findings
How bad is the Apple tax?
- Apple manufactures the lowest-priced Macbook Air for $718, including royalties and licensing fees (not including software development and marketing).
- This represents margins of 28% and 37% depending on the configuration, compared to the standard of 20% among Apple's notebook line, which I believe is well above the industry standard (hence the so called "Apple tax"). So in addition to paying the Apple tax, you are also paying for the Macbook Air tax of between 8 to 17%.
How does Apple make a good chunk of its money?
- By offering extremely pricey upgrades. By upgrading your SSD from 64 gb to 128, you pay $200 while Apple only incurs $73.60 in additional costs. The 13" costs $300 more for 256 gb of space, which costs just $141. Profit margin is now 37%.
- That money goes straight to Apple's profit, and is a key strategy to Apple's pricing strategy. They price the computer with relatively low specs, and many consumers inevitably pay exorbitant prices for the upgrades
Wait, so does this mean that Macs aren't good value?
Not necessarily, because value is very subjective. If Apple has designed a product that better meets your needs, and is worth the tax, then it is perfectly reasonable to go ahead and buy it.
They are clearly very good at generating profits. As a consumer it's interesting to learn about the margins and how Apple uses lower specs to encourage people to spend large amounts disproportionate to the upgrade value. Personally, I'm still keen to buy an 11.6" Macbook Air, but reading the article is kind of making me hesitant to double the flash storage.
Key Findings
How bad is the Apple tax?
- Apple manufactures the lowest-priced Macbook Air for $718, including royalties and licensing fees (not including software development and marketing).
- This represents margins of 28% and 37% depending on the configuration, compared to the standard of 20% among Apple's notebook line, which I believe is well above the industry standard (hence the so called "Apple tax"). So in addition to paying the Apple tax, you are also paying for the Macbook Air tax of between 8 to 17%.
How does Apple make a good chunk of its money?
- By offering extremely pricey upgrades. By upgrading your SSD from 64 gb to 128, you pay $200 while Apple only incurs $73.60 in additional costs. The 13" costs $300 more for 256 gb of space, which costs just $141. Profit margin is now 37%.
- That money goes straight to Apple's profit, and is a key strategy to Apple's pricing strategy. They price the computer with relatively low specs, and many consumers inevitably pay exorbitant prices for the upgrades
Wait, so does this mean that Macs aren't good value?
Not necessarily, because value is very subjective. If Apple has designed a product that better meets your needs, and is worth the tax, then it is perfectly reasonable to go ahead and buy it.
They are clearly very good at generating profits. As a consumer it's interesting to learn about the margins and how Apple uses lower specs to encourage people to spend large amounts disproportionate to the upgrade value. Personally, I'm still keen to buy an 11.6" Macbook Air, but reading the article is kind of making me hesitant to double the flash storage.
This thread wasn't a complaint. Re-read the "value" subheading.