How Apple Elegantly Moves from High End to Mass Market

I’ve been having some fun with spreadsheets lately, so I figured I’d explore this statement that I was pretty sure was true. Here’s Apple’s 3 major mobile platforms over the past 15 years.

A few notes on the numbers:

  • All numbers are based on entry level prices on December 31 of each year
  • iPhone prices are on-contract prices, how most people bought phones before this year
  • iPod prices don’t include the Shuffles, since I think these are a completely different beast

Now let’s look at sales for these 3 families over the same time:

There is a strong correlation between when these products start to drop in price and when their sales numbers really take off. Their products tend to start a little above what most people are willing to pay, and there are a few reasons for that. The biggest reason, I think, is that Apple refuses to make shitty products just to hit a price point. Apple probably could have made an iPad in 2010 that had a plastic body, crappy screen, and smaller battery and sold it for $249, but they didn’t. They made the most affordable, good tablet they could for a reasonable price. It wasn’t until a couple years later that they were able to make the iPad smaller and more efficient that they were able to sell one for half the original price.

This also has to do with how people perceive price. When the iPad launched at $499, that anchored that price point in people’s minds: “iPad = $499”. So if $499 was too rich for your blood, then when you see they sell an iPad for $399 or $299 or even $249, you subconsciously compare that to the anchor price of $499 you previously had in your head for iPads. At that point, you think more about the $250 you’re saving, not the $250 you’re spending.

I think both of these factors play together to make Apple the most profitable company in the world. Their refusal to make “cheap” (aka shitty) products as well as their smart pricing structure have worked masterfully. Apple is an aspirational brand that eventually everyone can buy into.

Bonus thought: consider about these sales charts when thinking about Apple Watch sales and pricing. We’re still in the first year of the Watch, and based on Apple’s history, it is the most expensive entry-level price it will ever have and at it’s lowest sales numbers. I think the future is bright for this young product.