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Speaking of Apple's Prices... Why Are They So Damn High?

More than anything, users appreciate the undeniable consistency (and therefore, customer confidence) that comes with any Apple machine or app. This applies to both consumers and professionals, though some of the latter may hesitate in days to come. Of course, achieving this consistency can be a double-edged sword — the very measures that guarantee the quality you’ve come to know and respect of Apple computing are the same tendencies that see them labeled as “notoriously controlling.” This too goes for the staunchly unwavering prices of Apple products across the marketplace — that double-edged sword extends all the way out to how such pricing is so firmly set. And, in terms of sword metaphors, this is more often the kind that cuts a hole in your pocket than the kind that “slashes prices.”

Let me be clear, I’m a long-time Apple user — and fan, to a point within reason — of both its hardware and software. Why is Apple the biggest thing in tech (read: “consumer tech,” short for), anyway? Because its goods always work very, very well, and they look damn sexy doing it. Equivalent-or-better hardware or open extensibility are way secondary to elegant-but-robust functionality in sleek chic. The ways in which Apple all but brands the pricing into each and every polycarbonate shell for retail is no secret (or even all that sketchy) per se — but it’s certainly interesting. Basically, Apple uses some traditional business tactics in conjunction with each other, but to a whole other ‘perfect storm’ sort of success.

See first, Exhibit A: standard product, non-Apple — which may get up to a 50% markup at retail, in turn allowing for a lot of variability (and discount-flavored marketability) with pricing. Then, see Exhibit B, from MacWorld:

Apple, however, extends only a tiny wholesale discount on its Macs and iPads to your retailer of choice. The actual numbers are a closely guarded secret, protected by confidentiality agreements between Cupertino and its resellers, but the difference probably amounts to only a few percentage points off the official price that you find at Apple’s own stores. With such a narrow gap to tinker with, most retailers can’t offer big discounts and still hope to turn a profit.

The shorthand: Apple doesn’t cut anyone any breaks in wholesale — the price virtually can’t go down without retailers going under (or at least, losing on every Mac deal). The catch: Why not markup higher for larger profit? Well, because then you’d be the only store in town able to advertise “Highest Mac Prices in Town!”

This is where the second part of Apple’s retail strategy kicks in: The company supplements its tiny wholesale discounts to resellers with more substantial monetary incentives that are available only if those resellers advertise its products at or above a certain price, called the “minimum advertised price” (MAP). This arrangement enables retailers to make more money per sale, but it prevents them from offering customers significant discounts, resulting in the nearly homogeneous Apple pricing we are used to.

The shorthand: Retailers may pay less per unit on each order, therefore standing to make a higher profit — but only if the unit goes for however much Apple wants. The catch: Between this rock and that hard place, why carry Apple goods at all? Well, because the demand is so great, you’d be the only store in town able to advertise “Lowest Mac Prices in Town — Because We Don’t Sell Any Macs!” (Drivers-by may only read the top of the sign, and then sue you for false advertisement by their own error).

As it fittingly turns out, the way Apple can ensure a viable cost-to-profit margin — and a therefore sustainable “work great, be sexy” business model — is to keep prices as consistent as the performance of its devices themselves. It all echoes that absolute, pain-staking level of quality control. And with that invariable price comes a product of invariably high quality, to be sure — but since the body governing how much it costs virtually everywhere may be somewhat biased toward the product, the real worth is determined by the user. Whether you actually get what you pay for is up for you to decide — as is which platform you return to or depart from when it comes time to upgrade to the next generation.

[Update:] By the way, my first smartphone will likely be an Android — how about you guys? Is anyone quitting Apple and never looking back — because of things like price, or not? Is anyone else taking the mid-ground, and going for whatever the best deal for performance may be?

Link: How Apple sets its prices — MacWorld

[via Gizmodo]

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  • The production company I worked at used Macs(all Mac Pro). I had only ever used pcs, and I spent a bit of time learning the software. I do like how folders are setup, and the speed at which programs open, but there was a problem… When we decided to get a better rig, none came at a price point low enough for what we needed. For a mac pro that came with 8gb ram, a lousy atI card, and no ssd drives, the prices were enormous.

    It doesn’t help when you upgrade to cs6 and have an ATI card, when you need an NVIDIA for the mercury playback? The lack of upgradability hurts. When paying $3000 for a mac pro and getting less than you could on a pc at that price point denies professionals the hardware they need to get the job done.

    Working with After Effects all day long, mac was good, but when we needed more power, we couldn’t simply slip in a few gigs of ram or a new video card. Both systems have their advantages, I choose upgradability, instead of buying a new system every time.

  • I’ve worked on video editing and animation on both platforms, and from my experience neither one is more stable than the other. I’ve been able to crash my mac with the same specs just as much as with my pc. I like to build computers, so naturally I prefer PC and I save a ton of money in doing so while still getting what I want in performance. If you want to spend the extra money, then by all means, but I certainly won’t.

    • Agreed. If I have the freedom and ability to build a system for what I need, I’ll do that. Apple to me offers the easy way out. Sometimes its good, but the day will come when they are too over bearing and controlling of their products, and that turns me off to their business.

      Hell, if adobe ran flawlessly on Linux, I’d take Linux over pc or apple any day.

      • Nygel bissel on 01.16.13 @ 4:48PM

        To Mason …
        You meant to say that you will take Linux OS over Microsoft windows I guess.
        avoid the confusion

    • I totally agree. I work with Macs a lot professionally, but I have been assembling my own Windows PCs since 1998. The stability or speed or workflow of a good windows system (since Win XP) is no other than that of a Mac system. My own self-assembled Windows PCs have a certain hardware quality which assures that the PC runs just as stable and fast as the Mac system, only my options are better and the price is a little lower.

      What I am tired of hearing is that Macs run much more stable than PCs or can do stuff better and quicker. As I said before, I work with Macs a lot, and every time a program crashes on me I think “good thing I have a Mac, because they always work perfectly”…

      Don’t get me wrong, I kind of like Macs and OSX. Macs have are well designed computers with good hardware, and the OS is really good, too. Security wise OSX is still a little better I think because of its Unix core, I’ll admit to that.
      However I hate being so limited hardware-wise. Apple never had a middle-ground desktop system, they only ever sold the overpowered Mac Pro with the most expensive server hardware, or the stylish but very limited iMac. My PC systems were always in-between, where I was getting a lot more power than from the iMac, but at 1/3 of the price of a MacPro.

      Right now, the MacPro is pretty much old hardware for too high a price, it is not really an option for anyone half sane.
      But would you really want to use an iMac as an editing workstation? I wouldn’t! It only has a mobile graphics chipset, you can’t even change the graphics adapter, and changing the harddrive is a days work if you even dare to do it yourself.

  • trackofalljades on 01.16.13 @ 3:18PM

    …and now of course, the comments will run all over “anything I’m anoyed with Apple about today” instead of pricing. I’ll bring up one pricing related story though, which I found interesting. Last month, Apple actually did something unprecedented. They allowed a major retailer (well, THE major retailer) to set some especially low holiday prices without taking their usual semi-legal action against that retailer for stepping out of line with the standard MAP.

    (there are much better writeups elsewhere, but CNN’s is brief for TLDR folks)

    I, for one, found this kind of disturbing actually. It doesn’t set a very good precedent for the speciality shops out there that persist and provide the kinds of professional-level interaction that you can’t get from an Apple Store (but some OS X users still need).

    I’d hate to see those kinds of places continue to disappear, while $%^&* Walmart of all places makes record Apple sales.

  • For me personally, Apple does not offer enough to justify the extremely higher cost over building my own computer. For the price of a Mac Pro, I can build a computer with far greater performance.

  • Apple made a net profit of $8.2 billion in Q4 2012. $8.2 BILLION. They are so far beyond “a viable cost-to-profit margin” it isn’t even funny. On the iPad, if I’m not mistaken they could literally cut the price of the device in HALF and still be making a decent profit.

    I’m quitting apple with my next computer and smartphone because the products are increasingly poorly made and I’m tried of having to take them in for repairs, but the pricing doesn’t help either. Apple could be offering most of its products for way way less, and the only difference would be lower annual bonuses for Apple employees, less in the company war chest, and probably lower stock prices. But I’d bet that even if they reduced every product’s price by 25% they’d still be making a better profit than most tech companies.

    • Nygel bissel on 01.16.13 @ 6:30PM

      I agree 100 percent with you all guys. Apple products are to damn expensive for the quality offered ..

      • I priced a MAC desktop @ $12,000.
        I then built my own PC with the best components I could find for just over $2,000.

        I own a MacBook Pro which I can’t replace because they dumbed the new ones down so much.

        I bought a loaded 17″ PC laptop that runs Premier Pro et al with no problems. I paid only $1,000.00 for it.

        Apple’s just not worth the money for what they offer.


        • Thyl Engelhardt on 01.21.13 @ 4:00AM

          Which surprises me. To get to 12000 dollars, you need to spec the system with dual 6-core Xeons E5645. Two of them alone would cost me 2800 _Euro_ at a well known, cheap supplier here in Germany.

  • We have switched permanently away from apple on all platforms and not looking back. The $30 connector for old iphones to new charger, the childlike advertising campaigns, and the lame anecdotal worn out arguments like Macs don’t get viruses / windows breaks down more have caused my production company to move completely off of mac including iphone.

  • A lot of my friends hold Macs, and every time they upgrade to a new model, they buy the pricey Apple care warranty because when they start behaving badly, they are impossible to fix by the average user. So add that to the pricey machine.

    Working as a promo director, I’ve crashed just as much on Macs (running FCP) as on Windows machines. For me, the legendary Mac reliability factor is a myth.

    Most motion graphics artists I know work on Hackintoshes and they favor the Windows side more than the Mac.

    So for me, the extra money you spend on a Mac is for the looks and myth that it’s a better platform.

  • HACKintosh all the way, baby.
    And that’s true for desktop & laptop.
    I just can’t wait now for a laptop like the VAIO Z to go out with Thunderbolt, and I will likely buy it.

  • Wait, you’ve made it to 2013 without a smartphone?

    • My thoughts exactly

    • Yeah, me too. and you know what? it feels good and I do not miss anything :)

      • Ironically, I haven’t had a phone for about 3 years and I’m 17. I don’t really care. If I was to ever buy a smartphone it would have to be a high end one because the lower end ones are just a waste of time. The S3 or iPhone I would much rather prefer over a $150 phone, mainly because of the screen size. They give you a touch screen and expect you to type using such a small size. Blah.

  • I agree that Macs may be way too expensive but even though I am well aware of that, I still would prefer to use them. That’s not to say that I won’t ever switch over though. I use and buy what’s familiar and available to me. I won’t buy a PC only to save money. I have to feel comfortable in numerous areas. I use what works for me.

  • john jeffreys on 01.16.13 @ 8:29PM

    Hating Apple has really become a huge trend on prosumer websites lately- the exact opposite of how it used to be. Name me a PC laptop that has a 7 hour battery, mid/high level internals, full aluminum construction, a damn good anti-glare screen, and is less than an inch thick and weighs under 6 pounds. Oh wait, it doesn’t exist.

    • Exactly. It’s not enough for a piece of hardware to have the same specs to be the same. It’s not about processors, or graphic cards, or a hardrive, it’s about the whole package, hardware + software in a real working enviroment, and no one can come close to what Apple does.

    • Hating on any one who questions why Apple is over charging? Whether or not its worth the price is very debatable, Ever since Apple switched from IBM CPU to Intel CPU we can now compare apples to apples! While i used to be an Apple fan boy, I do not see the Value in them anymore. Every “No one makes it like Apple” is usually about how it feels, not how it works. As to your MBP pedestal.
      The samsung series 7, Intel Core i7-3630QM 2.4GHz, 1.5TB HDD, 16gb ram, NVIDIA GeForce GTX 675M 2gig, 17.3″ screen, Blue-ray.

      it is a little bit thicker at 1.29″ -1.9″ but at $1,699 I’ll deal with it.

    • Asus Zenbook Prime UX32VD-DH71

  • I think to the consumer or even “prosumer”, Macs (high end iMacs and Mac Pros) may seem pricey, but show me a laptop other than a retina MacBook Pro that I can see more of my footage AND edit native Red Raw on location! Perfect playback and no lag. You can’t.

  • Now that I’m always using Premiere for my cutting, and about every other Adobe product, there’s no reason for me not to build up a much less expensive, much more powerful editing/effects rig to my exact specifications. I’m actually quite excited to finally be able to customize again!

  • This post has over 70 comments now, and it’s not even about filmmaking. Coke vs Pepsi, Republican vs Democrat, Mac vs PC…. Nobody ever wins these types of discussions.

    • john jeffreys on 01.17.13 @ 2:14PM

      In general, the people talking about cameras and gear online are not the ones outside making movies. NFS is a great example- people just sit here and get into BMCC vs. RED bloodbaths or argue about how much they hate Apple.

      It’s particularly depressing, though, that lately there have been 4-5 articles here, interviews with filmmakers whose projects are screening at Sundance, and none of them have ANY comments. While threads like these, mostly about prosumer bullshit and the non-creatives that love them, get hundreds of replies.

      • Feel free to comment on one of our Sundance posts. :)

      • Did it ever occur to you that not everyone here must be a “filmmaker”?
        I am not a filmmaker, I am a cameraman, and I mean cameraman – less dop, more camera operator. And I like it. I work as a cameraman and I shoot mostly documentary type tv pieces for the company I work with. It is not glamorous, it is not Hollywood, but I like it!

        I also like to read about and talk about cameras, camera tech, and computer tech, which besides photography is my other big time hobby.

        So yes, I do everything you criticize. But believe it or not, I love it!

  • I researched their PC workstation at the time and it exceeded the G5 in every performance test I found. “You mean the Avid man wasn’t lying?” It’s true Stevie boy, cause when you’re dropping 90K on an Avid system those politics don’t come into play. We even bought our G5 from Avid along with the Nitrus. The sales rep was a straight up guy and the people at Avid know their stuff. BTW, they like PCs because they can optimize their workstations to their software. Hey, doesn’t that sound familiar Stevie boy? lol

  • Don’t know if this is still the case, but 3 or so years ago, I was doing my research on buying my first iMac, the RRP I was looking at was around about 2900 and the reseller I went to said he could get that down to $2800, no further and even at that point he’d only be making 100 dollars on the unit anyway. So wether this is an isolated case or being an Apple reseller seems to be a horrible business decision.

    As for the Mac vs Pc argument, I can see the merits in both systems, but for me I’ve been a Mac user for 3 years (and with the purchase of my brand new top end 27 incher) I’d say for 3 years more. For me, it works, I like the infrastructure and to beat an old horse “it just works” …for me.

  • Tim Rockwood on 01.17.13 @ 9:52PM

    Perhaps reading Walter Isaacson’s Steve Jobs biography will remind some folks that there’s an ethical imperative to supporting innovation, which always costs more. Few draw the Macintosh–Mercedes analogy but it’s worth considering. Hyundai and Kia have bought and deconstructed many of the Stuttgart machines and attempted to emulate; the price differential is set by human consumptive behavior in the marketplace.

  • Seanj Hegarty on 01.18.13 @ 5:28AM

    Apple has always been a cunning business model. In 1984 they cut a deal with a bunch of colleges across America to force students to buy it’s computers at $1500 a piece. I had to buy one of the first ones to go to college where I wanted to. It was a 128k machine and within 6 months they released a 512k. The 128k version was basically useless at that point because there no programs being made for it anymore. Also it looked really cool with it’s original windows setup, but you really could not program on it without some external software you had to buy. Radio Shack’s TRS80 was $599 at the time and if you learned DOS you could make it do what you wanted. Today, I could build the most awsome Pc platform computer for the Price of the cheapest Mac. Compare the HPZ800 with all of it’ upgrading capacity to the Mac Pro and see what the comparison is or even go to your local computer repair guy and see what he could put together for you with $3500. I would never buy another Mac no matter how “sexy” they look.

  • Danny Derakhshan on 01.18.13 @ 12:21PM

    I use Mac computers and as a Google fan, I am trying to use Google Docs/Drive software, I love my Android phone and plan to keep Apple for desktop/laptop computing and Android as my phone OS. I also have a Kindle for reading books only.

    • I’m on the exact same lineup… Kindle for reading (cross-platform), Google everything else (cross-platform), Macs for laptop/desktop hardware, Android for mobile.

  • I left Apple behind almost 2 years ago.
    No certainty in the Pro market left me no option but to switch to PC.
    You still pay top dollar for HP Z series but like Apple the hardware is configured precisely to the OS – in this case Win7x64. And it is rock solid.
    I must say that other than the superficial sexiness of a Mac the PC edges it in performance and reliability.
    Plus you get a 3 year warranty from HP and it’s just so damned easy to upgrade especially with all that nVidia goodness.
    And luckily the Avid license is transferable and it also means I don’t have to use the dying Final Cut anymore (by the way… Premiere is now second behind Avid as the best cutting software).
    I enjoyed my Mac days, but I ditched them before they could ditch me.

  • Who cares?

    I’ve worked on tons of different boxes, different platforms, software from Flame to Nuke to AE, Avid, and Vegas. If the projects suck, or you suck as an artist, it doesn’t really matter. I know I’m deviating from the topic here a little bit, but I think it’s important to remember that no matter what gear you’re using, it makes no difference if the creative is garbage, or the story is lame.

    With that off my chest, I will say that I do prefer LInux > all for speed and functionality. It’s been no secret that Apple’s product is an overpriced luxury. Their brand is what they sell. They sell an image. That image has been related to creative professionalism. I remember I used to get chewed out by workmates for calling attention to that. Now it seems it’s publicly acknowledged. There is a reason they clear 28.3 billion in revenue yearly. Overpriced is an understatement.

    They are pretty, though. I typed this on my girlfriends macbook air 2012.

  • “Wait, you’ve made it to 2013 without a smartphone?” What is a Smart Phone? No ,really ,what is it ? I have yet to see one that is very Smart (literally or figuratively).
    Some of you people are SO funny. Still arguing about what is best PC or Mac? Really? You haven’t figured it out? But you are all so smart !
    Don’t forget ,just a very short time ago you were the turkeys lugging around Bricks thinking you were Kool . Then ,but a few minutes ago you had antenna hanging out your ears to let everyone on the street know how important you were. You know for when that call from the CEO comes in for you.
    Me ,I prefer my Cross -Platform Legal Pad and Sharpie.

  • At the end of the day its just the same thing in an expensive box. Abet one you cant open.

    Oh and anyone who tells you macs “just work” obviously has not worked with enough of them :)

  • I’m on the same reflexion since a few months. The first step was my new smartphone. I had an Iphone 3GS, and when came the time to change, after a lot of time, I decided to buy a Lumia 800 (at this time, WP8 didn’t exist).

    Why Windows Phone and not Android ? For the same reason that I choose Mac Vs PC. I knew I would be tempting to manage a lot of things in the OS. I just want a system who works well without the need of “manipulate” (in French, we say “bidouiller”, I don’t know the english word) the OS. For me, it’s lost time.

    At work, we use Mac computers (Macbook pro & iMac, and we are waiting for the hypothetic new Mac Pro). At home, after a few iMacs, I decided to build my own Hackintosh (your blog was a good source of inspiration !). It runs really well, for the same budget than an Imac, I’ve got a really powerful computer.

    Sorry for my language mistakes, I’m French :-)

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