Apple is a premium aspirational brand so the company avoids pricing wars and doesn’t really get into the low priced game. Why not? That’s a game for fools. Lower prices mean falling gross margins and that’s where the profits are; good margins help to fund R&D efforts, pay for good support, and keep executive bonuses flowing.
So, Apple’s products are premium priced, but usually comparable to pricing for similarly premium products. Here’s the problem. There are not many premium priced products to compete with Apple.
Here’s an obvious example from Microsoft.
The highly touted Microsoft Surface Book notebook weighs in at $3,199 for 1TB SSD storage, 16GB RAM, and a hefty GPU. That model includes a detachable 13-inch touchscreen.
The much criticized MacBook Pro notebook has more build options but comparably equipped weighs in at $3,199 for 1TB SSD storage, 16GB RAM, and a hefty GPU. That model includes a 15-inch non-detachable non-touchscreen.
Hmmm. What’s wrong with that picture? Microsoft gets kudos and good reviews for a less powerful PC notebook while Apple gets criticized for a more powerful notebook at the same price.
Here’s another obvious example from Samsung.
The highly acclaimed Samsung Galaxy S7 Edge sells for $699.99 with 32GB of storage. It features a fast CPU with a great 12 MP camera and Quad-HD AMOLED display, water resistance, and a big, wireless charging battery. It runs Android OS from 2016, though.
The unexpectedly popular iPhone 7 Plus sells for $769 (that’s $69.01 more) with 32GB of storage. It features a faster CPU with three cameras and a screen that has been called ‘indistinguishable from perfect,’ water resistance, and greater battery life than most similarly sized smartphones. And, it runs the latest iOS version.
Hmmm. What’s wrong with that picture? It doesn’t seem as if Apple’s products are so overpriced, right?
Let’s look at the new AirPods, Apple’s new wireless ear buds. Since earbuds come with every iPhone, the $169 price tag for AirPods seems excessive until compared with wireless headphone competitors. The more comparable Bragi Dash is $299. The basic model is $149. The Erato Apollo 7 wireless Bluetooth earphones are $259. On Amazon. Samsung’s similar IconX earbuds are $153. On Amazon.
Those are just a few examples where Apple’s seemingly premium pricing doesn’t seem all that premium. In fact, comparably equipped gear seems comparably priced.
One more example, though you can’t buy it yet.
Samsung’s new Galaxy Tab S3 is a 9.7-inch tablet that comes with a pen. The smart keyboard is an extra $130. Add to the $599 price tag, and the total comes to $730. Apple’s comparable iPad Pro with Pencil and Smart Keyboard is $768. But the Pencil isn’t included.
Considering that Apple’s products get software updates more frequently, come with excellent retail support, and are priced similar to comparable products by competitors, how is it that Apple makes so much more money than anyone else?