I have a feeling that not many PR firms will release news on June 29. No doubt, the focus will be on Apple (NASDAQ: AAPL)'s eagerly awaited iPhone.
Of course, the buzz is already intense.
But what about the price? Is Apple asking too much?
I had a chance to interview Rafi Mohammed, an expert on pricing. He runs a consulting firm, Culture of Profit, and is the author of the book The Art of Pricing.
What's your take on the pricing strategy?
Apple did a great job of setting prices.
It kept the 4GB model under the psychological $500 threshold which was smart. It probably could have charged a higher price for the 8GB model though. The fact that the phone is now hot, so Apple could probably charge even more is irrelevant. No one could have predicted the amount of buzz the iPhone is enjoying.
What about Apple's future pricing strategy?
This is where it gets interesting Tom. Most new technology products start prices high and lower them. This is what Apple did for the iPod by the way. I think Apple made pricing missteps with the iPod: They discounted it too quickly and heavily -- and brought out the Nano (very stylish and well reviewed) at too low of a price. Apple definitely left money on the table with the iPod.
What's interesting about the iPhone is that it has little real competition on the horizon and the tremendous buzz is only making its value higher. Even with reported gross margins of 50%, which makes it tempting to discount, I'd advise Apple to moderate its discounting and consider setting higher prices when it rolls out models with new features.
Would you buy an iPhone?
Tom, I'm a really thrifty customer -- it took me years to trade in my cassette Walkman for an iPod. But even I want to purchase an iPhone at its release!
Tom Taulli is the author of various books, including the Complete M&A Handbook and the EDGAR-Online Guide to Decoding Financial Statements.
What about Apple's future pricing strategy?
This is where it gets interesting Tom. Most new technology products start prices high and lower them. This is what Apple did for the iPod by the way. I think Apple made pricing missteps with the iPod: They discounted it too quickly and heavily -- and brought out the Nano (very stylish and well reviewed) at too low of a price. Apple definitely left money on the table with the iPod.
What's interesting about the iPhone is that it has little real competition on the horizon and the tremendous buzz is only making its value higher. Even with reported gross margins of 50%, which makes it tempting to discount, I'd advise Apple to moderate its discounting and consider setting higher prices when it rolls out models with new features.
Would you buy an iPhone?
Tom, I'm a really thrifty customer -- it took me years to trade in my cassette Walkman for an iPod. But even I want to purchase an iPhone at its release!
Tom Taulli is the author of various books, including the Complete M&A Handbook and the EDGAR-Online Guide to Decoding Financial Statements.
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Reader Comments (Page 1 of 1)
6-17-2007 @ 9:58PM
Beltway Greg said...
Kids, I'm doubling down on this sucker. Everything is going into the mix. The dog, the shotgun, the truck, even the old lady and my Jerry "When You're Hot You're Hot" Reed 8-tracks. I've taken a long look at the Fabian numbers, and I think I've noticed a cup with handle building with strong right side support at the 60 minute moving average. I haven't seen a base like this since John Entwhistle of the Who died. I taking all of the proceeds down to Schwab tomorrow at the opening and I'm putting everything on the line. Either Apple and the IPhone are going to be the Secretariat of the market "Secretariat is moving like a tremendous machine" or this thing is going to be New Coke. If I'm correct I'll see all of you on Necker Island with Sir Richard Branson. If I'm wrong I'll be hanging with the King at the BK.
Beltway Greg.
"Remember, please spay and neuter your hedge fund managers."
6-25-2007 @ 11:08PM
randy said...
Sure, $800 could be charged at first (duh), but novelty wears off quickly, and given the specs of this thing, that price is absolutely unsustainable.
So what this "pricing expert" is advocating is just price gauging. Nothing complicated about that.
Apple is already making mad margins on these things. A five-week stint of price gauging on their part just isn't necessary. There's no incentive for them to be that blatantly disingenuous.