How Apple sets its prices

[pinkoos]

Interesting article:

http://www.macworld.com/article/2024257/...rices.html

[M A V I C]

The article really has nothing to do with how Apple sets its prices. It's mainly on how Apple keeps resellers from selling its products at a discount. Two different things.

How Apple keeps resellers from discounting things has been widely known for 10+ years. I was more interested in their reasoning on how they set their prices - eg adding up dev, mfg, support, marketing, margins...

[Numo]

What I don't understand is if Apple has so much cash, why doesn't it lower its prices? Wouldn't that increase market share and raise its stock prices at the same time?

[Article Accelerator]

Ammo wrote:
What I don't understand is if Apple has so much cash, why doesn't it lower its prices? Wouldn't that increase market share and raise its stock prices at the same time?

No.

The game is rigged so that Apple cannot win. If Apple doesn't have market share, it sucks. If Apple's margins drop, it sucks.

[space-time]

They figured out where the maximum profit curve is.

Write a book and sell for $1000, very few people will buy, you won't get rich. Sell the book for $2 which is just slightly more than what it costs you to print it, you sell a lot of books but again you don't get rich.

Now sell the book for $29.95, about 1 million people buy it and you are rich.

Apple does exactly the same thing IMHO.

[Speedy]

Correct. Apple used a Mac to figure out the apex of the profit curve. Monopoly$oft used a Windoes PC to do the same. Go figure.

space-time wrote:
They figured out where the maximum profit curve is.

Write a book and sell for $1000, very few people will buy, you won't get rich. Sell the book for $2 which is just slightly more than what it costs you to print it, you sell a lot of books but again you don't get rich.

Now sell the book for $29.95, about 1 million people buy it and you are rich.

Apple does exactly the same thing IMHO.

[space-time]

Speedy wrote:
Correct. Apple used a Mac to figure out the apex of the profit curve. Monopoly$oft used a Windoes PC to do the same. Go figure.

remember when Intel came out with a Pentium that had a bug and sometimes the result of a division was wrong? it was rare but it did happend that the computer got the result wrong. Maybe MS used one of those :devil:

[sekker]

Still a nice article.

[Numo]

space-time wrote:
They figured out where the maximum profit curve is.

Write a book and sell for $1000, very few people will buy, you won't get rich. Sell the book for $2 which is just slightly more than what it costs you to print it, you sell a lot of books but again you don't get rich.

Now sell the book for $29.95, about 1 million people buy it and you are rich.

Apple does exactly the same thing IMHO.

But to continue your analogy, what if someone else begins selling a comparable (at least in enough people's minds) book for $19.95? So now your market share decreases, your net profits go down, and Wall Street gets nervous so your stock price drops. I'm not suggesting that Apple reduce the quality of their products; I wonder if they should reduce their profit margins a bit in order to stay on top. What good is all their money in the bank doing them?