7 ms·

Dear Apple, stop overcharging for extra iPad memory

30 points by iProject 14y ago

AngryParsley 14y ago
Truly a tragedy. When I get my 64GB iPad Mini, I'll be sure to install iViolin Nano and play Ashoken Farewell followed by the theme to Schindler's List. It amuses me that the author was aware of his kvetching, but went ahead with the article anyway.
bitdiffusion 14y ago
Yes - because whenever you buy hardware, optional upgrades are always available to purchase at cost-price /sarcasm Although I guess it's not quite as bad with something like a notebook where at least you have the choice of buying your own upgrades and installing them yourself...
- kaolinite 14y ago
  He acknowledged this: "I can understand paying a nice premium over what you'd typically pay for flash memory, but it gets a little ridiculous when you're paying five times what you'd normally pay." However Apple adds an awful lot onto the price for upgrades. When I bought my iMac a while ago, the only difference between the two 21.5" models was one had a 500MB HDD whereas the other had 1TB. The difference in price was somewhere in the region of £250. It will have cost Apple maybe £20-30 more for that extra price yet they charged around 1/4 of the original price for the upgrade. In the end, I just got the 500MB iMac. It was a great machine and worth every penny, it's just a shame that they sting the customer on upgrades. When I bought a Lenovo laptop a year or so later, they too were pretty expensive to upgrade (battery, CPU, HDD), but nowhere near the premium that Apple adds.
  - weiran 14y ago
    It would've also had a discrete GPU which would add much more to the total cost than a bigger HDD.
    - kaolinite 14y ago
      Not that I'm aware of. I looked through the specs for quite some time and was unable to see a difference. I know there are differences between Macbooks of the same screen size, but couldn't spot any other hardware changes.
cletus 14y ago
I expect this isn't gouging so much as Apple just liking consumer-friendly price points and upgrades. By "consumer-friendly" I mean numbers like $499/599/699 (Wifi iPad) are "nice" numbers and $100 is a difference that gives choice without giving too much choice. Apple isn't really in the habit of cutting prices (this has exceptions and I'm ignoring various FX price adjustments). They're more about giving you more for the same money. So at some point you'll probably see the same prices but for 32/64/128GB. I'm a little surprised this hasn't happened already. I expect we'll see it next year. 2014 at the absolute latest. Perhaps this would be too much of a constraint on flash chip supply though (IIRC Apple is already the largest consumer of flash memory so doubling their demand would be significant). I, for one, will happily buy a 128GB iPad. That all being said, I think there are now three serious missteps in the post-Jobs Apple: 1. The Maps debacle; 2. Elongating the iPhone 5 to create yet another resolution (the relative uniformity of the iOS line with only 2/4 (if you could retina) resolutions was a huge advantage for developers). I really don't see the point; and 3. The Mini. Sure they'll sell millions of them but by that same argument Windows Vista was a success. IMHO 16:10/9 makes far more sense on the 7-8" form factor rather than the "fat" 4:3. Also, 7-8" tablets are moving to be 720p+ and this is below that at 1024x768. The price is also (IMHO) too high. Google OTOH (disclaimer: I work for Google) I think has a lineup that is starting to make a lot more sense between the Nexus 4/7/10 at some pretty nice price points. I guess that's a good comparison for this article because the Nexus 7 upgrade from 16 to 32GB is only $50. EDIT: Two points: 1. I'm not calling the iPad Mini a Vista-level failure. Seriously, please read what I actually wrote (the whole electric car was also a big example of people not reading what I wrote but I digress...). I simply said that selling a lot of something doesn't preclude it from being a misstep; and 2. The whole idea of "excessive profit" with a luxury good is fundamentally flawed. If you don't like it, don't buy it. Ultimately it costs what it costs because the market bears it. EDIT2: I understand very well why the mini is 1024x768. Perhaps I didn't explain my point very well. My point is that's not a very good resolution for a 7-8" tablet (IMHO of course). IMHO the 16:10 ratio works much better (YMMV) but they have their hands tied.
- masklinn 14y ago
  It's just a very simple (and standard) way of doing price discrimination, and getting the maximum amount of money each customer will pay for the product (while keeping a single set of prices). In fact, Google does something very similar on the '7, though they ask for half what Apple does they charge $50 for a flash bump with a BOM cost estimate of $17. And the article quotes that. (note: I'd be surprised if both companies didn't get their flash for less than the quoted BOM)
confluence 14y ago
It's called price discrimination (http://en.wikipedia.org/wiki/Price_discrimination http://en.wikipedia.org/wiki/Price_discrimination). Windows does it with their entire operating system/office line - student licenses are the cheapest because it's all they can afford (otherwise they just pirate - since value to them is so low), home the next (same reason), then the office, then corporations (they can afford a lot - and they derive a lot of value). You charge what people can afford in terms of value to maximise your profit and increase your chances of continuing to supply said value (or not) into the future. Apple sells most of their tablets very competitively, but they know that there are plenty of people out there who get plenty more value, and are perfectly happy to pay up. So to extract these profits they create stacked price/entry levels to actively help those who can afford overpriced memory and perceive large amounts of derived value to happily pay up for it. Value perceived/extracted and not the price of creation are what's important to consumers in non-commodity markets and the suppliers who supply them.
- leviathan 14y ago
  A relevant good read is Joel Spolsky's "Camels and Rubber Duckies" http://www.joelonsoftware.com/articles/CamelsandRubberDuckies.html http://www.joelonsoftware.com/articles/CamelsandRubberDuckie...
- gavanwoolery 14y ago
  Yep, and Apple has traditionally capitalized on this big time. For example, on a Mac Pro: http://store.apple.com/us/configure/MD772LL/A http://store.apple.com/us/configure/MD772LL/A? You pay about $150 per 4 GB of RAM, or $37.5 per GB. Current ram prices are about $4.5 per GB! (See: http://www.newegg.com/Product/ProductList.aspx?Submit=ENE&N=100007611+600078206&QksAutoSuggestion=&ShowDeactivatedMark=False&Configurator=&IsNodeId=1&Subcategory=147&description=&hisInDesc=&Ntk=&CFG=&SpeTabStoreType=&AdvancedSearch=1 http://www.newegg.com/Product/ProductList.aspx?Submit=ENE&#3... for example.)
  - bonaldi 14y ago
    At least with the Pro you can go to Crucial. If an SD card slot was available on the iPads the OP's complaint would go away, I'm guessing
timedoctor 14y ago
Their pricing strategy is simple - make the maximum profit possible. Apple is a premium product and the upgrades are there to get more money out of the customer. The relationship with the value received is tenuous.
- Argorak 14y ago
  That has nothing to do with premium/non-premium. Thats called "good business". Even with a low-cost product you try to maximize profit, but in a different niche.
nicholassmith 14y ago
I always enjoy this whole "iSuppli estimates the cost at $X whereas Apple charges $X*3(ish)", like Apple should feel bad about saying "You want more space? Fine, pay $100". You don't want to pay the extra? Don't. Get a 16Gb device, I have for both my iOS devices and I'm reasonably happy with it due to Dropbox/Box.net having a decent clients that allow me to expand my space concerns outwards. The argument that they should charge less when people are willing to pay is ridiculous, they should charge what the market will pay, which in this case is $100 to move up the storage scale. EDIT: Possibly this should be a separate comment. In the fashion world there's two well known UK clothing companies who occupy slightly overlapping markets, but with incredibly different price points. The material costs are roughly the same, stores in similar locations, staff wages the same and so on. Both have their products made in the same factory, by the same people. One charges about 2-3x for their products than the other, the other charges a 40-50% markup immediately. That's just how luxury goods economics end up working.
- maxerickson 14y ago
  It's at least possible that they would make more money with lower prices (but it depends on where the volume is and where it would be).
  - nicholassmith 14y ago
    It's very possible they would, but the brand has been built around premium, luxury products rather than smaller margins and it's doing well for them (see the cash pile that Smaug guards).
    - maxerickson 14y ago
      My point was more that they may be charging less than the market will pay. If lower margins on the better models result in a sufficient increase in upgrade participation, they capture more of the economic surplus. It's likely that the $100 bumps are just fine, but I don't see that $50 bumps would do much to dilute their brand (especially given the total lack of visible differentiation between the models).
jpxxx 14y ago
"First, an admission: I preordered an iPad Mini. But I wasn't happy about the price I was paying." The author kindly gives you permission to bail on the very first sentence. Lesser pundits would bury that much deeper.
zachinglis 14y ago
He hits the nail on the head in the first paragraph. He bought anyway. Apple will continue to use unfair pricing because people are willing to buy it, even if they complain about it. I'm frustrated by the fact the MacBook extra RAM/SSD is so expensive compared to manufacturing costs. But it's my only option, so I am going to have to pay it now aren't I?
- masklinn 14y ago
  > I'm frustrated by the fact the MacBook extra RAM/SSD is so expensive compared to manufacturing costs. That's quite variable actually, at least for the non-air non-retina ones the trend was generally that the prices (for RAM, not SSD) where fair-ish right at release (markup of 10 to 50%, roughly in line with other manufacturer-provided upgrades), but Apple doesn't float its prices so a year later with RAM prices having fallen by half or more (depending on the quantity) the prices were inane.
- taligent 14y ago
  > But it's my only option, so I am going to have to pay it now aren't I. No it isn't your only option. Third party SSD have been available for a while now.
theorique 14y ago
"Dear Apple, stop overcharging for extra iPad memory, or else I'll buy your product anyway ... and then COMPLAIN about it!"
benblack86 14y ago
If it helps, think of it as a tax on the rich.
JanneVee 14y ago
Apple can charge almost whatever they want for the memory as long as the competition is lagging behind on the software. It will probably be better in a couple of years. I'm buying a Nexus 7 instead for multiple reasons and the memory pricing is one of them. Main reason is that I already have an iPad 2 and want a smaller tablet but not the same one I already have.
trotsky 14y ago
I wonder if he understands that a long drawn out complaint about pricing where the author understands all of the component details, yet bought the product anyway and shows all signs of being willing to do so again... completely validates their pricing strategy.
1SaltwaterC 14y ago
"You've found market price when buyers complain, but still pay." IIRC, PG said that. We're on HN. Rings any bells?
Someone 14y ago
You can bend this any way you want. Here's one take: Apple is subsidizing the cost of the cheaper iPads and compensating by making the top of the line more expensive. If you find that a ridiculous argument, consider that, every time they haven't been able to make them fast enough to meet demand, their prices were too low for the market. I do not think either of these viewpoints is right. This is simply a matter of "price to what it is worth, not to what it costs"
deleted 14y ago
[deleted]
acomjean 14y ago
I think the problem is the base memory is too low compared to the system spec. Apple is selling an arguably "high end" product and 16 gb is really pushing what is needed. They've upped speed and screen resolution but the memory levels has remained the same. Unfortunately not upgradable or expandable after purchase.
zacharyvoase 14y ago
<economics> I'm echoing the feelings of a lot of others in this comment thread. Moaning about price of something but buying it anyway is a pointless exercise. By buying the product you're sending a clear signal that they can continue to charge the same price. Part of me also wants the title to include the word 'please'—since this is a request, not a demand. And, indeed, there are many products sold by companies where the per-item margin is huge compared to the materials cost. Perfume, designer clothing, fancy cars…and software. But we buy perfume anyway because we have lots of money but no perfume, and would rather have some perfume and a little less (but still lots of) money. I'm reminded of an economics joke I once heard. An economist and his friend are walking past a concert hall. The friend turns to the economist and says "you know, I always wanted to learn how to play an instrument," to which the economist responds "clearly not."
- fauigerzigerk 14y ago
  If a tech journalist buys the thing for professional reasons, the signal he sends is not the same as a consumer buying it. I do agree with your luxury/fashion goods comparison though. That's exactly the business that Apple is in.
  - johncoltrane 14y ago
    He doesn't send any special signal: his money goes with the rest of the money from other buyers.
sudhirj 14y ago
This is pure self-selecting pricing: it's neither new nor restricted to Apple. The premise is simple: your market is divided into a very large spectrum of spending ability. So the most efficient way to charge each customer the best possible price is to simply let them select it themselves. For obvious reasons, you cannot sell the same product at each price, so some improvement is necessary at each upgrade. Quite often the upgrade is a token one, but sometimes people do need the extra features offered. I see this all the time at restaurants, car dealerships, insurance companies and pretty much any other time someone is trying to sell me something.
drcube 14y ago
It wouldn't be Apple if they didn't overcharge.
MrFoof 14y ago
Can anyone point to a volume hardware OEM that doesn't charge considerably for storage capacity or RAM? Off the cuff, let's go buy a laptop from Dell, Lenovo, HP, etc. Lenovo's T430u is $730 with 4GB of memory and a 320GB hard disk. An additional 4GB of memory is $160, even though the consumer wholesale price of such DIMMs is $20. The cost to upgrade to a single 8GB DIMM is $450, even though the consumer wholesale price of such DIMMs is $40-50. The cost to go from a 320GB 7200rpm hard disk to a 1TB 5400rpm hard disk is $170, even though the consumer wholesale price of such a disk is $110. ----- Every OEM does this for memory and storage, because to the end user, there is an obvious, measurable benefit. Twice the storage means they can store twice as many things. Twice the memory means they can do twice as many things at once. This is why Apple doesn't mention clock speeds for their custom ARM SoCs, but instead how many times faster it is -- 1.0GHz to 1.4GHz doesn't resonate with people as well as "twice as fast", especially when if you looked at just clock speed you might think it was only 40% faster.
johncoltrane 14y ago
Dear Apple, stop making profits.

30 points by iProject 14y ago

Truly a tragedy. When I get my 64GB iPad Mini, I'll be sure to install iViolin Nano and play Ashoken Farewell followed by the theme to Schindler's List. It amuses me that the author was aware of his kvetching, but went ahead with the article anyway.

bitdiffusion 14y ago

Yes - because whenever you buy hardware, optional upgrades are always available to purchase at cost-price /sarcasm Although I guess it's not quite as bad with something like a notebook where at least you have the choice of buying your own upgrades and installing them yourself...

kaolinite 14y ago
He acknowledged this: "I can understand paying a nice premium over what you'd typically pay for flash memory, but it gets a little ridiculous when you're paying five times what you'd normally pay." However Apple adds an awful lot onto the price for upgrades. When I bought my iMac a while ago, the only difference between the two 21.5" models was one had a 500MB HDD whereas the other had 1TB. The difference in price was somewhere in the region of £250. It will have cost Apple maybe £20-30 more for that extra price yet they charged around 1/4 of the original price for the upgrade. In the end, I just got the 500MB iMac. It was a great machine and worth every penny, it's just a shame that they sting the customer on upgrades. When I bought a Lenovo laptop a year or so later, they too were pretty expensive to upgrade (battery, CPU, HDD), but nowhere near the premium that Apple adds.
- weiran 14y ago
  It would've also had a discrete GPU which would add much more to the total cost than a bigger HDD.
  - kaolinite 14y ago
    Not that I'm aware of. I looked through the specs for quite some time and was unable to see a difference. I know there are differences between Macbooks of the same screen size, but couldn't spot any other hardware changes.

cletus 14y ago

I expect this isn't gouging so much as Apple just liking consumer-friendly price points and upgrades. By "consumer-friendly" I mean numbers like $499/599/699 (Wifi iPad) are "nice" numbers and $100 is a difference that gives choice without giving too much choice. Apple isn't really in the habit of cutting prices (this has exceptions and I'm ignoring various FX price adjustments). They're more about giving you more for the same money. So at some point you'll probably see the same prices but for 32/64/128GB. I'm a little surprised this hasn't happened already. I expect we'll see it next year. 2014 at the absolute latest. Perhaps this would be too much of a constraint on flash chip supply though (IIRC Apple is already the largest consumer of flash memory so doubling their demand would be significant). I, for one, will happily buy a 128GB iPad. That all being said, I think there are now three serious missteps in the post-Jobs Apple: 1. The Maps debacle; 2. Elongating the iPhone 5 to create yet another resolution (the relative uniformity of the iOS line with only 2/4 (if you could retina) resolutions was a huge advantage for developers). I really don't see the point; and 3. The Mini. Sure they'll sell millions of them but by that same argument Windows Vista was a success. IMHO 16:10/9 makes far more sense on the 7-8" form factor rather than the "fat" 4:3. Also, 7-8" tablets are moving to be 720p+ and this is below that at 1024x768. The price is also (IMHO) too high. Google OTOH (disclaimer: I work for Google) I think has a lineup that is starting to make a lot more sense between the Nexus 4/7/10 at some pretty nice price points. I guess that's a good comparison for this article because the Nexus 7 upgrade from 16 to 32GB is only $50. EDIT: Two points: 1. I'm not calling the iPad Mini a Vista-level failure. Seriously, please read what I actually wrote (the whole electric car was also a big example of people not reading what I wrote but I digress...). I simply said that selling a lot of something doesn't preclude it from being a misstep; and 2. The whole idea of "excessive profit" with a luxury good is fundamentally flawed. If you don't like it, don't buy it. Ultimately it costs what it costs because the market bears it. EDIT2: I understand very well why the mini is 1024x768. Perhaps I didn't explain my point very well. My point is that's not a very good resolution for a 7-8" tablet (IMHO of course). IMHO the 16:10 ratio works much better (YMMV) but they have their hands tied.

masklinn 14y ago
It's just a very simple (and standard) way of doing price discrimination, and getting the maximum amount of money each customer will pay for the product (while keeping a single set of prices). In fact, Google does something very similar on the '7, though they ask for half what Apple does they charge $50 for a flash bump with a BOM cost estimate of $17. And the article quotes that. (note: I'd be surprised if both companies didn't get their flash for less than the quoted BOM)

confluence 14y ago

It's called price discrimination (http://en.wikipedia.org/wiki/Price_discrimination http://en.wikipedia.org/wiki/Price_discrimination). Windows does it with their entire operating system/office line - student licenses are the cheapest because it's all they can afford (otherwise they just pirate - since value to them is so low), home the next (same reason), then the office, then corporations (they can afford a lot - and they derive a lot of value). You charge what people can afford in terms of value to maximise your profit and increase your chances of continuing to supply said value (or not) into the future. Apple sells most of their tablets very competitively, but they know that there are plenty of people out there who get plenty more value, and are perfectly happy to pay up. So to extract these profits they create stacked price/entry levels to actively help those who can afford overpriced memory and perceive large amounts of derived value to happily pay up for it. Value perceived/extracted and not the price of creation are what's important to consumers in non-commodity markets and the suppliers who supply them.

leviathan 14y ago
A relevant good read is Joel Spolsky's "Camels and Rubber Duckies" http://www.joelonsoftware.com/articles/CamelsandRubberDuckies.html http://www.joelonsoftware.com/articles/CamelsandRubberDuckie...
gavanwoolery 14y ago
Yep, and Apple has traditionally capitalized on this big time. For example, on a Mac Pro: http://store.apple.com/us/configure/MD772LL/A http://store.apple.com/us/configure/MD772LL/A? You pay about $150 per 4 GB of RAM, or $37.5 per GB. Current ram prices are about $4.5 per GB! (See: http://www.newegg.com/Product/ProductList.aspx?Submit=ENE&N=100007611+600078206&QksAutoSuggestion=&ShowDeactivatedMark=False&Configurator=&IsNodeId=1&Subcategory=147&description=&hisInDesc=&Ntk=&CFG=&SpeTabStoreType=&AdvancedSearch=1 http://www.newegg.com/Product/ProductList.aspx?Submit=ENE&#3... for example.)
- bonaldi 14y ago
  At least with the Pro you can go to Crucial. If an SD card slot was available on the iPads the OP's complaint would go away, I'm guessing

timedoctor 14y ago

Their pricing strategy is simple - make the maximum profit possible. Apple is a premium product and the upgrades are there to get more money out of the customer. The relationship with the value received is tenuous.

Argorak 14y ago
That has nothing to do with premium/non-premium. Thats called "good business". Even with a low-cost product you try to maximize profit, but in a different niche.

nicholassmith 14y ago

I always enjoy this whole "iSuppli estimates the cost at $X whereas Apple charges $X*3(ish)", like Apple should feel bad about saying "You want more space? Fine, pay $100". You don't want to pay the extra? Don't. Get a 16Gb device, I have for both my iOS devices and I'm reasonably happy with it due to Dropbox/Box.net having a decent clients that allow me to expand my space concerns outwards. The argument that they should charge less when people are willing to pay is ridiculous, they should charge what the market will pay, which in this case is $100 to move up the storage scale. EDIT: Possibly this should be a separate comment. In the fashion world there's two well known UK clothing companies who occupy slightly overlapping markets, but with incredibly different price points. The material costs are roughly the same, stores in similar locations, staff wages the same and so on. Both have their products made in the same factory, by the same people. One charges about 2-3x for their products than the other, the other charges a 40-50% markup immediately. That's just how luxury goods economics end up working.

maxerickson 14y ago
It's at least possible that they would make more money with lower prices (but it depends on where the volume is and where it would be).
- nicholassmith 14y ago
  It's very possible they would, but the brand has been built around premium, luxury products rather than smaller margins and it's doing well for them (see the cash pile that Smaug guards).
  - maxerickson 14y ago
    My point was more that they may be charging less than the market will pay. If lower margins on the better models result in a sufficient increase in upgrade participation, they capture more of the economic surplus. It's likely that the $100 bumps are just fine, but I don't see that $50 bumps would do much to dilute their brand (especially given the total lack of visible differentiation between the models).

jpxxx 14y ago

"First, an admission: I preordered an iPad Mini. But I wasn't happy about the price I was paying." The author kindly gives you permission to bail on the very first sentence. Lesser pundits would bury that much deeper.

zachinglis 14y ago

He hits the nail on the head in the first paragraph. He bought anyway. Apple will continue to use unfair pricing because people are willing to buy it, even if they complain about it. I'm frustrated by the fact the MacBook extra RAM/SSD is so expensive compared to manufacturing costs. But it's my only option, so I am going to have to pay it now aren't I?

masklinn 14y ago
> I'm frustrated by the fact the MacBook extra RAM/SSD is so expensive compared to manufacturing costs. That's quite variable actually, at least for the non-air non-retina ones the trend was generally that the prices (for RAM, not SSD) where fair-ish right at release (markup of 10 to 50%, roughly in line with other manufacturer-provided upgrades), but Apple doesn't float its prices so a year later with RAM prices having fallen by half or more (depending on the quantity) the prices were inane.
taligent 14y ago
> But it's my only option, so I am going to have to pay it now aren't I. No it isn't your only option. Third party SSD have been available for a while now.

theorique 14y ago

"Dear Apple, stop overcharging for extra iPad memory, or else I'll buy your product anyway ... and then COMPLAIN about it!"

benblack86 14y ago

If it helps, think of it as a tax on the rich.

JanneVee 14y ago

Apple can charge almost whatever they want for the memory as long as the competition is lagging behind on the software. It will probably be better in a couple of years. I'm buying a Nexus 7 instead for multiple reasons and the memory pricing is one of them. Main reason is that I already have an iPad 2 and want a smaller tablet but not the same one I already have.

trotsky 14y ago

I wonder if he understands that a long drawn out complaint about pricing where the author understands all of the component details, yet bought the product anyway and shows all signs of being willing to do so again... completely validates their pricing strategy.

1SaltwaterC 14y ago

"You've found market price when buyers complain, but still pay." IIRC, PG said that. We're on HN. Rings any bells?

Someone 14y ago

You can bend this any way you want. Here's one take: Apple is subsidizing the cost of the cheaper iPads and compensating by making the top of the line more expensive. If you find that a ridiculous argument, consider that, every time they haven't been able to make them fast enough to meet demand, their prices were too low for the market. I do not think either of these viewpoints is right. This is simply a matter of "price to what it is worth, not to what it costs"

deleted 14y ago

[deleted]

acomjean 14y ago

I think the problem is the base memory is too low compared to the system spec. Apple is selling an arguably "high end" product and 16 gb is really pushing what is needed. They've upped speed and screen resolution but the memory levels has remained the same. Unfortunately not upgradable or expandable after purchase.

zacharyvoase 14y ago

<economics> I'm echoing the feelings of a lot of others in this comment thread. Moaning about price of something but buying it anyway is a pointless exercise. By buying the product you're sending a clear signal that they can continue to charge the same price. Part of me also wants the title to include the word 'please'—since this is a request, not a demand. And, indeed, there are many products sold by companies where the per-item margin is huge compared to the materials cost. Perfume, designer clothing, fancy cars…and software. But we buy perfume anyway because we have lots of money but no perfume, and would rather have some perfume and a little less (but still lots of) money. I'm reminded of an economics joke I once heard. An economist and his friend are walking past a concert hall. The friend turns to the economist and says "you know, I always wanted to learn how to play an instrument," to which the economist responds "clearly not."

fauigerzigerk 14y ago
If a tech journalist buys the thing for professional reasons, the signal he sends is not the same as a consumer buying it. I do agree with your luxury/fashion goods comparison though. That's exactly the business that Apple is in.
- johncoltrane 14y ago
  He doesn't send any special signal: his money goes with the rest of the money from other buyers.

sudhirj 14y ago

This is pure self-selecting pricing: it's neither new nor restricted to Apple. The premise is simple: your market is divided into a very large spectrum of spending ability. So the most efficient way to charge each customer the best possible price is to simply let them select it themselves. For obvious reasons, you cannot sell the same product at each price, so some improvement is necessary at each upgrade. Quite often the upgrade is a token one, but sometimes people do need the extra features offered. I see this all the time at restaurants, car dealerships, insurance companies and pretty much any other time someone is trying to sell me something.

drcube 14y ago

It wouldn't be Apple if they didn't overcharge.

MrFoof 14y ago

Can anyone point to a volume hardware OEM that doesn't charge considerably for storage capacity or RAM? Off the cuff, let's go buy a laptop from Dell, Lenovo, HP, etc. Lenovo's T430u is $730 with 4GB of memory and a 320GB hard disk. An additional 4GB of memory is $160, even though the consumer wholesale price of such DIMMs is $20. The cost to upgrade to a single 8GB DIMM is $450, even though the consumer wholesale price of such DIMMs is $40-50. The cost to go from a 320GB 7200rpm hard disk to a 1TB 5400rpm hard disk is $170, even though the consumer wholesale price of such a disk is $110. ----- Every OEM does this for memory and storage, because to the end user, there is an obvious, measurable benefit. Twice the storage means they can store twice as many things. Twice the memory means they can do twice as many things at once. This is why Apple doesn't mention clock speeds for their custom ARM SoCs, but instead how many times faster it is -- 1.0GHz to 1.4GHz doesn't resonate with people as well as "twice as fast", especially when if you looked at just clock speed you might think it was only 40% faster.

johncoltrane 14y ago

Dear Apple, stop making profits.