A pricing study of Apple

“We never had an objective to sell a low-cost phone. Our primary objective is to sell a great phone and provide a great experience, and we figured out a way to do it at a lower cost.”

These were Tim Cook’s ending lines during a business interview back in 2011 when he was freshly appointed CEO.

A Unique Value Proposition

Apple never competes on price. Any entrepreneur knows that a price war will eventually lead to a race to the bottom, and hurts the market as a whole. Apple, the most valuable company in the world, still follows this and has never wavered on its pricing strategy.

Price skimming

Price skimming is a strategy followed by premium brands where the products are priced very high with higher profits so that fewer sales are needed to break even for the manufacturer. It focuses on maximizing profits by charging a high price for early adopters of a new product, then gradually lowering the price to attract thriftier consumers

Unbundle to increase price and revenue

Unbundling your products or services offers more choices for your audience by splitting them into multiple offerings tailored to meet the needs of your audience. This helps a business reach different consumers by offering just what they want.

Why does it work?

First of all, there is a very strong brand to support the premium prices. Second, there are a number of customers with strong purchasing power who are not sensitive to price. Third, the amazing speed with which Apple can replace its product line with the newer generation.

Every company is a software company; even if it’s not in the software business