What is Behind the Apple’s Pricing Strategy?

Pricing strategy is one of the most important business strategies. The wealth of your business in much will depend on that pricing strategy and customers perception about your prices.

I am Apple’s iPhone user nearly one year, and now I am close to making a decision to buy an iPad. In the same time, my future considerations are first to buy a Mac and after that to transfer my operating system on all my equipment from Windows to Mac.

I don’t know why, but I feel that I am starving for their products. It’s probably connected with their so successful product launch strategy for each of their products.

I know that Apple is very good at product launch strategy when they encourage starving, but I didn’t even think about their pricing strategy at all.

Last week I read a really good post from Ben Kunz about Apple’s pricing strategy on Bloomberg Businessweek on msnbc.com.

Look at these two points about Apple’s product prices that the author mention in the post: The popular iPod Touch media player has been revamped at three price points – $229, $299, and $399 – all costing more than the iPhone, which does everything the Touch can plus make phone calls. The current iPad costs $499 in its lowest-powered configuration vs. the Archos 7 Home Tablet ($189) or the Dell Streak ($299 with a two-year AT&T contract). And competitors are rushing to offer more functionality for hundreds of dollars less; the Streak tablet throws in a videocam and phone, which iPads don’t yet match.

To succeed in this pricing strategy the business must have much more than a product or the technology. This will need the combination of different business strategies that can be used to increase overall business potential.

First I must think that all products are brilliant. After that, I will look at prices of iPod Touch and compare it with the iPhone and probably will choose to buy iPhone because it is reasonable thinking. The iPad features and all the buzz around it will make me starve about a device like that and probably will buy after some period of time.

My mind is prepared that for such a product, I will pay $500. Meanwhile, if it became cheaper with the launching of next generation of the product I will be more satisfied. And at the end with all of those Apple’s products in my hands, I will purchase some songs, buy some applications and rent some video.

That’s the whole cycle in that pricing strategy.

And at the end the author advise is:

Watch Apple, and you can learn pricing tricks for your own business.

Posted by Dragan Sutevski

Dragan Sutevski is a founder and CEO of Sutevski Consulting, creating business excellence through innovative thinking. Get more from Dragan on Twitter. Contact Dragan