Pricing and Apple

With our recent lectures and readings on pricing, and the launch of the new iPad, I began thinking about what has made Apple so successful.  Yes, they clearly have superior products and technology, but they are doing a tremendous job at marketing these products.  I'm sure there are plenty of products out there that are superior to the popular product in their industry, but no one might ever hear of them and they might never get to the market.  Apple has great ads and marketing campaigns, however they have nailed it when it comes to pricing.

I believe Apple always uses a price skimming strategy with their new products.  And they have every reason to.  Their new products are almost always completely new technology to the industry and they usually have no real direct competition.  So what they do is price the product high to start because they know that people will over pay to get their hands on the newest technology behind the newest Apple product.

The high prices signal quality, and people are willing to pay for high quality.  They also have limited number of supply when they first launch and profit by having large margins on every sale.  This is price skimming at its best.  Then once the product has been out for a while and the buzz starts to calm down, they simply begin to slowly bring down the price.  Its usually not because another competitor has caused this though, its because they have another new product to launch to take the spot of their current product.  And once again, they turn to the skimming strategy with the new launch.

It really is fascinating when you think about everything that goes into giving an Apple product that untouchable feel.  I truly believe that their pricing strategy is a major reason for all of their products' successes.