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Apple pricing strategy is a masterclass lesson. For the iPhone, there once was a time that $600 was the cost of the highest end phone. Now Apple has created a
by alberth 2y ago
Apple pricing strategy is a masterclass lesson.
For the iPhone, there once was a time that $600 was the cost of the highest end phone. Now Apple has created a pricing architecture (and laddering) where $600 today only gets you the entry level iPhone.
Similarly with iPad. They have been able to get consumers now to buy effectively a 2-year old components inside an iPad Air and still command a premium price ... and making it feel "new".
I'm not knocking Apple.
I'm genuinely impressed with their pricing architecture and strategy they have been able to execute on over the years.
- FredPret 2y agoThere's been a ton of inflation. Apple makes an OK but not spectacular margin on hardware. These are for Q4 2024: Hardware: 98B revenue, 59.5B cost of sales, 38.5B gross profit, 40% gross margin Services: 26B revenue, 6.5B cost of sales, 19.5B gross profit, 75% gross margin Look on page three of this: https://www.sec.gov/ix?doc=/Archives/edgar/data/320193/000032019325000008/aapl-20241228.htm https://www.sec.gov/ix?doc=/Archives/edgar/data/320193/00003...
- alberth 2y agoNone of those services would exist without Apples hardware business though. So you can't exactly look at the margins in insolation.
- FredPret 2y agoAs an investor, I don't. But your point was about rising hardware prices, and services subsidize the hardware if anything by the mechanism you mention.