OnDemand WTP Pricing Research

Discussion: So can we talk about the pricing strategy for the Surface Pro 3?

Eye on Windows Article

NO KEYBOARD BUNDLED? REALLY?

At those prices above, the devices don’t even come with a keyboard bundled. THAT. IS. CRAZY. No more needs to be said there.

I see this so clearly but bloggers tend to have blind spots so I thought it might be fun to take some time and ask around.

I asked a bunch of people I respect why they thought the pricing was what it was.

Wes Miller from Directions on Microsoft said the following:

It is high if you’re comparing it to an iPad. I believe Microsoft’s stance is that most iPad users also have PCs, so SP3 lets them only purchase one device and theoretically meet both use cases. Personally, I feel this story only works if the user is shopping for a new PC anyway, and has no tablet. Otherwise, yes – I think the pricing is too high.

Why so expensive? Because it’s an expensive device, and Microsoft doesn’t want to sell it at a loss.

Tony Bradley from The Bradley Strategy Group disagrees with me. He said:

When Microsoft launched the Surface Pro, it positioned it as a tablet and expected people to choose it over an iPad or a Galaxy Tab or whatever. That marketing position ignored the fact that the Surface Pro is also an actual PC running the full version of Windows and all traditional Windows software, and made it a choice between spending $400 or $500 on a tablet, and spending $900 on a tablet. iPad wins that bet every time.

Now, though, Microsoft has evolved the Surface Pro to be even better than it was originally, and—more importantly—it has properly positioned it against ultrabooks rather than tablets. Instead of the “very expensive tablet that can run Windows software”, the Surface Pro 3 is the “reasonably priced ultrabook that also offers the flexibility of being a tablet.” I think the tagline “The tablet than can replace your laptop” hits the nail on the head.

Originally, I thought Microsoft should have subsidized the Surface Pro and taken a loss to offer them at the same $500 as the iPad. It may have had more success if they had, but that would also be a hard cycle to break out of. Once you offer it at $500 for a “limited time” nobody would be willing to spend $900 on it again. Now, Microsoft is instead positioning the Surface Pro 3 against the MacBook Air. In most configurations they’re priced about the same. The higher-end configurations the Surface Pro 3 is more expensive, but for your extra $100 you get a thinner, lighter “laptop” that can also be a tablet—so the price is still reasonable.

I could make an argument for undercutting Apple, but I like that Microsoft has the confidence to go toe-to-toe with the MacBook Air. There is a psychology to cheap prices that people think they’re cheap. People are willing to spend for things of value, and if you cut the price to artificially boost sales you also undermine the perceived value.

Top Comments

Bob Fahlin
I owned the first Surface Pro for a year. Used it as my only mobile computing device. Loved it, until the eye fatigue of working on a small screen set in. Bought the Surface Pro 2, and shortly thereafter ditched it for a Yoga Pro 2 (screen size being the primary issue).The Surface Pro 3 looks like a very compelling device. The price is hefty, but the build quality is tough to beat. All-in-all the surface line is priced between 10%-15% higher than the competition, particularly when you consider that most laptops (the devices Microsoft is now targeting) include a keyboard. If the keyboard were included, you would actually be hard pressed to find a device with a similar build quality andspecifications for less. Particularly when you consider the native digitizer and pen integration.

I think the Surface Pro 3 may be the device that brings me back into the Microsoft fold…

 

Rodney Longoria

Well, this is way more than “just a tablet”. It is not designed to be another iPad wannabe but more like an ultrabook (and look at THOSE prices). They are looking at the high end of the market, so it is not for the average joe out there. Instead of the corporate user lugging around an ultrabook, a tablet and a smart phone, Microsoft was trying to come up with a device that would eliminate one of the other devices. Smart move AND a smart sell to Fortune 100 companies, I think. Look at the Macbook Air plus an iPad priced together (with their contracts added), and you’ll see what I mean.

The only issue I have with their pricing is it does not include a keyboard (kind of like owning a bowling ball without the carrying case).

More Here: http://www.eyeonwindows.com/2014/05/27/so-can-we-talk-about-the-pricing-strategy-for-the-surface-pro-3/#disqus_thread

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