Apple’s Expensive Devices Bring Big Profits, But Come At A Price | Forbes

To understand Apple pricing is to grok the idea that most of its products sell to a specific price and margin target. It’s no coincidence that in most categories, Apple’s average revenue per unit sold is nearly a straight line when viewed on a graph tracking it over time. This fantastic analysis at Asymco illustrates the point quite clearly. iPhone pricing barely varies from the middle $600s and while things like the Plus models cause it to trend higher, the less-expensive SE has pulled it back toward historical norms. And though Mac bounces around in a small band, it doesn’t much escape the $1200-$1300 range on average.

This kind of ruler-like precision is not an accident. Apple executives spec components to the price targets and select product mix — the different models that that make up the line — with a rather specific intent to make these prices stick. When needed, the amounts of extra storage available as upsells or the precise configurations offered are tweaked and, voila, pricing is back where Apple wants it.

Still the company has learned some lessons that it can’t always completely control its own fate. At the iPad introduction, Apple took the breath away from media and analysts by pricing the product much lower than expected. At $499, it was about half what people guessed Apple would charge. The company even made comments suggesting the price could go lower in time. What Apple didn’t fully anticipate was how much lower and how quickly. It made efforts to compete in lower-price segments with the smaller, cheaper iPad Mini (a product that still exists but is no longer inexpensive at $399).

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Apple’s Expensive Devices Bring Big Profits, But Come At A Price.