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Nonsense, Apple prices the iPhone at a level they think the market would bear. Unless it's clients valued the ability to freely install any software at $500 (wh

by qwytw 5y ago

Nonsense, Apple prices the iPhone at a level they think the market would bear. Unless it's clients valued the ability to freely install any software at $500 (which I think is highly doubtful) there is no way they could increase their prices by that much without losing a lots of sales. And in any case Apple's profit margins on their hardware are considerably higher any other smartphone manufacturer's.

judge2020 5y ago
That's exactly my point - their current profit margins include post-sale app store driven revenue. Removing that means they no longer make the same money that they did before, so if they want to maintain that margin they'll have to increases upfront costs to offset the lost revenue. One more example is the Oculus Quest 2 - it's $300 (64gb ssd) or $400 (256gb) for a truly outstanding headset, but it probably costs Facebook $400-$600 to make each unit of hardware. If you don't want to see ads[0] or log in with Facebook, that price becomes $800[1]. All i'm saying is that people will always pick the product that's cheaper but equivalent and are usually fine with post-purchase rent seeking via ads or a service fee that is (invisibly) tacked onto future purchases. 0: https://www.bbc.com/news/technology-57526135 https://www.bbc.com/news/technology-57526135 1: https://i.judge.sh/lone/Derpy/HcfjI7YBPF.png https://i.judge.sh/lone/Derpy/HcfjI7YBPF.png ( https://business.oculus.com/products/ https://business.oculus.com/products/ )
- Y_Y 5y ago
  I think you misunderstand. A company will just charge whatever price maximises profit, there's no reason to "maintain margin" or anything like that. If they thought they could increase the price today and get a net gain after demand fell then they'd absolutely do it.
  - judge2020 5y ago
    Sure, but more people are happy paying after the fact (in the case of oculus, via ads and 30% of sales going to FB) that I’m highly doubtful that they would make the same overall profit if they did sell it for the actual price they want without getting any money on the backend, especially if that backend money never stops even 10 years after the initial purchase.
    - mthoms 5y ago
      They aren’t somehow entitled to make “the same overall profit”. You seem to think they are. It’s additional revenue. The phone itself is already hugely profitable. In fact, the original business model didn’t include App Store revenue at all, and Apple were perfectly happy with that.

by qwytw 5y ago

judge2020 5y ago

That's exactly my point - their current profit margins include post-sale app store driven revenue. Removing that means they no longer make the same money that they did before, so if they want to maintain that margin they'll have to increases upfront costs to offset the lost revenue. One more example is the Oculus Quest 2 - it's $300 (64gb ssd) or $400 (256gb) for a truly outstanding headset, but it probably costs Facebook $400-$600 to make each unit of hardware. If you don't want to see ads[0] or log in with Facebook, that price becomes $800[1]. All i'm saying is that people will always pick the product that's cheaper but equivalent and are usually fine with post-purchase rent seeking via ads or a service fee that is (invisibly) tacked onto future purchases. 0: https://www.bbc.com/news/technology-57526135 https://www.bbc.com/news/technology-57526135 1: https://i.judge.sh/lone/Derpy/HcfjI7YBPF.png https://i.judge.sh/lone/Derpy/HcfjI7YBPF.png ( https://business.oculus.com/products/ https://business.oculus.com/products/ )

Y_Y 5y ago
I think you misunderstand. A company will just charge whatever price maximises profit, there's no reason to "maintain margin" or anything like that. If they thought they could increase the price today and get a net gain after demand fell then they'd absolutely do it.
- judge2020 5y ago
  Sure, but more people are happy paying after the fact (in the case of oculus, via ads and 30% of sales going to FB) that I’m highly doubtful that they would make the same overall profit if they did sell it for the actual price they want without getting any money on the backend, especially if that backend money never stops even 10 years after the initial purchase.
  - mthoms 5y ago
    They aren’t somehow entitled to make “the same overall profit”. You seem to think they are. It’s additional revenue. The phone itself is already hugely profitable. In fact, the original business model didn’t include App Store revenue at all, and Apple were perfectly happy with that.