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Yeah my initial thought was “because people are willing to pay more for it”; I’m happy to hear that that was somewhat the conclusion of the article. People are

Yeah my initial thought was “because people are willing to pay more for it”; I’m happy to hear that that was somewhat the conclusion of the article. People are irrational, they value things that don’t necessarily cost more to make, and sometimes even the fact that they need to pay extra for it, is in fact why they want it. I’m reminded of that silly $1000 app in the beginning of the AppStore: https://en.m.wikipedia.org/wiki/I_Am_Rich https://en.m.wikipedia.org/wiki/I_Am_Rich

caycep 5y ago
Aesthetic benefits, perceived at least, are worth $200 to some people...and that black thing looked cool. Especially SWEs who work in products w/ zero marginal costs shouldn't complain about market value of a product vs. BOM costs
- KarlKemp 5y ago
  It’s quite a phenomenon that tech seems culturally committed to a disdain for anything it deems “not real”, such as emotions, aesthetics, law, or philosophy. …especially if you consider that even product that don’t end as ‘vaporware’ are often immaterial. They’ll joke about the uselessness of philosophy, then argue the differences between == and ===. It’s really no surprise from there that they’ve happily embraced “fiat isn’t real” conspiracies and seek to improve that terrible state of affairs with a zoo of inscrutable algorithm-money.
  - rurp 5y ago
    I agree with some of this but totally disagree with the point about aesthetics. Form over function is a major strain of modern design, especially within Apple specifically. Just as one example, I've been using a work issued macbook for over a year and I still regularly send the screen brightness or volume off the rails because I lightly rested a finger on the stupid touchbar. But hey, it looks cool to use the volume slider!
    - KarlKemp 5y ago
      Yes, „form follows function“ is the version of aesthetics best suited for the enjoyment of people who are unwilling to admit that they can enjoy something without the need to legitimize their emotions with a sciéncy backstory. More broadly, look at any discussion of web fonts here and you’ll find three suggestions to give everyone „three fonts and be done with it, screw those designers and the strange feelings I get when I see them on their skateboards.“
deleted 5y ago
[deleted]
kevincox 5y ago
I don't think that valuing something different from the production cost is irrational. If I never paid more than production cost + some "reasonable" markup I wouldn't be able to buy a lot of things that I enjoy. A smart business sells things at roughly the price that people value them. A key job of the business is making that cost them less then the selling price.
tomrod 5y ago
> People are irrational People are boundedly rational. The client base purchasing the black enclosure valued it for a few extra hundred USD relative to other things they may choose to spend their funds on.
chrisseaton 5y ago
> People are irrational, they value things that don’t necessarily cost more to make That’s not irrational. It doesn’t cost any more to make a lemon cake than a chocolate cake but a lemon cake is more valuable to me because I don’t like chocolate. Perfectly rational.
- hutzlibu 5y ago
  This is clearly irrational. Chocolate cake is way better ... (otherwise good point)
- naoqj 5y ago
  I don't see how not liking chocolate could be by any stretch of the imagination "rational".
  - chrisseaton 5y ago
    You can swap it out for any other preference - that's not the important bit.
  - maicro 5y ago
    In continued good-spirited-conversation - if you get sick every time you eat something containing chocolate, I think it's completely rational to form an aversion to it.
    - naoqj 5y ago
      I get pimples!
- rTX5CMRXIfFG 5y ago
  We’d like to see you make a rational, purely logic-based, and objective line of argumentation to justify why you like lemon cake instead of chocolate cake.
  - popcube 5y ago
    maybe his nervous system randomly prefer it?
kqr 5y ago
This is important in another way, too: by offering almost the same thing at two different prices, consumers get to self-select based on how price sensitive they are. Since some people are willing to pony up significantly more for the black, they can offer the non-black at a slightly lower cost than they otherwise would, which means they can sell MacBooks to a segment of the market that would otherwise consider them out of reach. Any time virtually the same thing is offered at different prices, you can either complain that it's unfair one target segment has to pay more... or realise that the flip side of the coin is that less price sensitive people subsidise lower costs for more price sensitive people -- which could seem completely fair depending on ideologies. If you're a hardcore capitalist you see it as a way for the manufacturer to expand their target market without sacrificing profitability. If you're more on the left you see it as taking from the rich and giving it to the poor, without having to resort to coercion.
- deleted 5y ago
  [deleted]
- lostcolony 5y ago
  I have a minor quibble with the term 'subsidizing', since it is still being sold at a profit. It's just a lower margin, because the point of maximal profit in the lower end of a segmented market is necessarily lower than the point of maximal profit in a non-segmented market. It's not going to go into negative profit (and thus enable the customer to buy it "at a loss" for the business, whereby the business is effectively paying part of the cost of the thing on behalf of the customer) as a result of segmentation. So it's neither costing the business profit, nor is it offering the good at a per unit loss. It -is- offering the good at a lower margin than would make sense in an unsegmented market.
  - kqr 5y ago
    You're right, of course. That was a sloppy choice of words on my part.
- dangus 5y ago
  You might say this is why the iPhone is missing a telephoto lens rather than missing the ultra-wide lens. Each lens/sensor theoretically costs a very similar amount of manufacturing cost to include, so theoretically if your goal was to give the customer the best value on a cheaper 2-lens phone, you would want to give them the two most used lenses: the normal wide lens and the telephoto lens. However, Apple gates the more-desired telephoto lens to the Pro model, because it needs to balance the significant price increase with the reality that there isn't much of a manufacturing cost difference between Pro and non-Pro phones. So, it's a market segmentation based on some desired features. I disagree with the idea that there's any sort of a positive "flip side" to this strategy from the customers' perspective. This is how profit is maximized. Apple could sell the iPhone 13 Pro for less money and still make a profit, but they know that customers of certain income brackets will pay over a thousand bucks for a phone. If the iPhone 13 had a telephoto lens instead of the ultra-wide lens, and the ProMotion display, the iPhone 13 wouldn't cost a dime more to manufacture. In this configuration, there would be very little reason for most people to upgrade to the Pro model.
bko 5y ago
> People are irrational, they value things that don’t necessarily cost more to make, and sometimes even the fact that they need to pay extra for it, is in fact why they want it. I think it would be irrational to value things based on how much they cost to make. The rational thing would be to value something based on utility to you. Why should you care how much it cost to make, unless you have as an alternative the ability to make it yourself?
- Fatnino 5y ago
  If I understand you correctly, "my kingdom for a horse" is actually a good economic decision.
  - stingraycharles 5y ago
    Maybe not economical, but definitely rational.
    - paxys 5y ago
      Could also be economical depending on how much you value your life
  - ballenf 5y ago
    If a horse is the sole means of surviving an attack, the horse is worth way more than 100 kingdoms because what use is a kingdom to a dead man?
    - User23 5y ago
      It's an effective business model if you can pull it off. For example a variation thereof made Marcus Licinius Crassus the richest man in Rome[1]. [1] https://en.wikipedia.org/wiki/History_of_firefighting#Rome https://en.wikipedia.org/wiki/History_of_firefighting#Rome
  - revolvingocelot 5y ago
    The better aphoristic horse-kingdom-related summation is probably For Want Of A Nail: For want of a nail the shoe was lost. For want of a shoe the horse was lost. For want of a horse the rider was lost. For want of a rider the message was lost. For want of a message the battle was lost. For want of a battle the kingdom was lost. And all for the want of a horseshoe nail.
Forgeties79 5y ago
I mean it’s a little unfair to compare it to the “I am Rich” app because there was a functional difference - a substantial increase in internal storage. 90gb may not seem like much but in 2008, going 160gb->250gb? That was a decent chunk. Worth $200? No. Worth something? Absolutely.
paxys 5y ago
You may say spending $200 extra for a black enclosure is irrational, but then most of the world will say spending $1500+ on any MacBook is itself irrational. Ultimately people have their own reasons and justifications for spending their own money.

caycep 5y ago

Aesthetic benefits, perceived at least, are worth $200 to some people...and that black thing looked cool. Especially SWEs who work in products w/ zero marginal costs shouldn't complain about market value of a product vs. BOM costs

KarlKemp 5y ago
It’s quite a phenomenon that tech seems culturally committed to a disdain for anything it deems “not real”, such as emotions, aesthetics, law, or philosophy. …especially if you consider that even product that don’t end as ‘vaporware’ are often immaterial. They’ll joke about the uselessness of philosophy, then argue the differences between == and ===. It’s really no surprise from there that they’ve happily embraced “fiat isn’t real” conspiracies and seek to improve that terrible state of affairs with a zoo of inscrutable algorithm-money.
- rurp 5y ago
  I agree with some of this but totally disagree with the point about aesthetics. Form over function is a major strain of modern design, especially within Apple specifically. Just as one example, I've been using a work issued macbook for over a year and I still regularly send the screen brightness or volume off the rails because I lightly rested a finger on the stupid touchbar. But hey, it looks cool to use the volume slider!
  - KarlKemp 5y ago
    Yes, „form follows function“ is the version of aesthetics best suited for the enjoyment of people who are unwilling to admit that they can enjoy something without the need to legitimize their emotions with a sciéncy backstory. More broadly, look at any discussion of web fonts here and you’ll find three suggestions to give everyone „three fonts and be done with it, screw those designers and the strange feelings I get when I see them on their skateboards.“

deleted 5y ago

[deleted]

kevincox 5y ago

I don't think that valuing something different from the production cost is irrational. If I never paid more than production cost + some "reasonable" markup I wouldn't be able to buy a lot of things that I enjoy. A smart business sells things at roughly the price that people value them. A key job of the business is making that cost them less then the selling price.

tomrod 5y ago

> People are irrational People are boundedly rational. The client base purchasing the black enclosure valued it for a few extra hundred USD relative to other things they may choose to spend their funds on.

chrisseaton 5y ago

> People are irrational, they value things that don’t necessarily cost more to make That’s not irrational. It doesn’t cost any more to make a lemon cake than a chocolate cake but a lemon cake is more valuable to me because I don’t like chocolate. Perfectly rational.

hutzlibu 5y ago
This is clearly irrational. Chocolate cake is way better ... (otherwise good point)
naoqj 5y ago
I don't see how not liking chocolate could be by any stretch of the imagination "rational".
- chrisseaton 5y ago
  You can swap it out for any other preference - that's not the important bit.
- maicro 5y ago
  In continued good-spirited-conversation - if you get sick every time you eat something containing chocolate, I think it's completely rational to form an aversion to it.
  - naoqj 5y ago
    I get pimples!
rTX5CMRXIfFG 5y ago
We’d like to see you make a rational, purely logic-based, and objective line of argumentation to justify why you like lemon cake instead of chocolate cake.
- popcube 5y ago
  maybe his nervous system randomly prefer it?

kqr 5y ago

This is important in another way, too: by offering almost the same thing at two different prices, consumers get to self-select based on how price sensitive they are. Since some people are willing to pony up significantly more for the black, they can offer the non-black at a slightly lower cost than they otherwise would, which means they can sell MacBooks to a segment of the market that would otherwise consider them out of reach. Any time virtually the same thing is offered at different prices, you can either complain that it's unfair one target segment has to pay more... or realise that the flip side of the coin is that less price sensitive people subsidise lower costs for more price sensitive people -- which could seem completely fair depending on ideologies. If you're a hardcore capitalist you see it as a way for the manufacturer to expand their target market without sacrificing profitability. If you're more on the left you see it as taking from the rich and giving it to the poor, without having to resort to coercion.

deleted 5y ago
[deleted]
lostcolony 5y ago
I have a minor quibble with the term 'subsidizing', since it is still being sold at a profit. It's just a lower margin, because the point of maximal profit in the lower end of a segmented market is necessarily lower than the point of maximal profit in a non-segmented market. It's not going to go into negative profit (and thus enable the customer to buy it "at a loss" for the business, whereby the business is effectively paying part of the cost of the thing on behalf of the customer) as a result of segmentation. So it's neither costing the business profit, nor is it offering the good at a per unit loss. It -is- offering the good at a lower margin than would make sense in an unsegmented market.
- kqr 5y ago
  You're right, of course. That was a sloppy choice of words on my part.
dangus 5y ago
You might say this is why the iPhone is missing a telephoto lens rather than missing the ultra-wide lens. Each lens/sensor theoretically costs a very similar amount of manufacturing cost to include, so theoretically if your goal was to give the customer the best value on a cheaper 2-lens phone, you would want to give them the two most used lenses: the normal wide lens and the telephoto lens. However, Apple gates the more-desired telephoto lens to the Pro model, because it needs to balance the significant price increase with the reality that there isn't much of a manufacturing cost difference between Pro and non-Pro phones. So, it's a market segmentation based on some desired features. I disagree with the idea that there's any sort of a positive "flip side" to this strategy from the customers' perspective. This is how profit is maximized. Apple could sell the iPhone 13 Pro for less money and still make a profit, but they know that customers of certain income brackets will pay over a thousand bucks for a phone. If the iPhone 13 had a telephoto lens instead of the ultra-wide lens, and the ProMotion display, the iPhone 13 wouldn't cost a dime more to manufacture. In this configuration, there would be very little reason for most people to upgrade to the Pro model.

bko 5y ago

> People are irrational, they value things that don’t necessarily cost more to make, and sometimes even the fact that they need to pay extra for it, is in fact why they want it. I think it would be irrational to value things based on how much they cost to make. The rational thing would be to value something based on utility to you. Why should you care how much it cost to make, unless you have as an alternative the ability to make it yourself?

Fatnino 5y ago
If I understand you correctly, "my kingdom for a horse" is actually a good economic decision.
- stingraycharles 5y ago
  Maybe not economical, but definitely rational.
  - paxys 5y ago
    Could also be economical depending on how much you value your life
- ballenf 5y ago
  If a horse is the sole means of surviving an attack, the horse is worth way more than 100 kingdoms because what use is a kingdom to a dead man?
  - User23 5y ago
    It's an effective business model if you can pull it off. For example a variation thereof made Marcus Licinius Crassus the richest man in Rome[1]. [1] https://en.wikipedia.org/wiki/History_of_firefighting#Rome https://en.wikipedia.org/wiki/History_of_firefighting#Rome
- revolvingocelot 5y ago
  The better aphoristic horse-kingdom-related summation is probably For Want Of A Nail: For want of a nail the shoe was lost. For want of a shoe the horse was lost. For want of a horse the rider was lost. For want of a rider the message was lost. For want of a message the battle was lost. For want of a battle the kingdom was lost. And all for the want of a horseshoe nail.

Forgeties79 5y ago

I mean it’s a little unfair to compare it to the “I am Rich” app because there was a functional difference - a substantial increase in internal storage. 90gb may not seem like much but in 2008, going 160gb->250gb? That was a decent chunk. Worth $200? No. Worth something? Absolutely.

paxys 5y ago

You may say spending $200 extra for a black enclosure is irrational, but then most of the world will say spending $1500+ on any MacBook is itself irrational. Ultimately people have their own reasons and justifications for spending their own money.