Apple Pay? More like Pay Apple!
You’d have to be some kind of idiot to imagine a time will arrive when Apple will offer goods that the typical punter considers cheap.
Apple is a premium brand, offering high-quality kit, and that comes with a certain kind of price tag attached - the kind that makes your wallet gasp and bank account scream for mercy.
Increasingly, though, there’s a sense Apple’s becoming more overt regarding ‘upselling’, seemingly hobbling entry-level items to make them appear as relatively poor value for money and ‘encourage’ you to plump for the next slot up.
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A good example is the new iPhone 6. The 5s it replaced originally came in three storage sizes: 16, 32 and 64 GB. The difference between each tier was £80 in the UK, meaning you essentially got double the ‘value’ (in terms of storage) when shifting from 32 to 64 as you did from 16 to 32 - a basic upsell, and one that’s fairly typical at the high-end of a technology line. It’s a simple psychological trick that makes people feel ‘rewarded’ for buying the most expensive item in a line - and spend more money than they otherwise would have.
With the iPhone 6, the rumour-mill guessed - or at least hoped - we’d see 32/64/128 as the configurations for the new device, not least given that memory prices continue to fall; instead, we got 16/64/128, but still the same 80-quid gap between each. In an age of increasingly huge apps and games, and on a high-end smartphone, 16 GB seems rather ludicrous from a storage perspective, and it comes as no surprise to see online polls suggesting most iPhone 6 buyers have bought the 64 GB model.
This seems like a direct result of Apple’s negative pricing tactics, attempting to push you from the lower end rather than tempt you towards the top. We’ve gone from ‘good/better/best’ to ‘meh/BUY ME! BUY ME!/best’.
The cheapest iPhone 6 (for a given value of cheap, which is ‘not very’) now looks expensive when compared to the middle option, which boasts four times the storage. Instead of feeling rewarded for jumping from the second to third model, Apple’s made the first a relatively poor choice. If enough people think similarly (which seems to have happened), that raises the average selling price of the iPhone, and swells Apple’s coffers. But had Apple started its line at 32 GB, you can bet a whole lot more people would have gone for the cheapest model, because it would have been ‘good enough’. Apple’s existing stance is a win for Apple, but it’s hard to see how it’s a win for the consumer.
We see similar pricing elsewhere in Apple’s other product lines. The 21.5-inch iMac has three options, each £150 apart. But the low-end model is significantly slower, with half the storage and far worse built-in graphics. It addresses a possible need for a sub-£1000 iMac, but at the same time seems designed primarily to drive more sales of the mid-end model. Even in iCloud, we see cynical decision making in evidence, with the free tier lacking the space for even a single device back-up, thereby pushing people hard to part with £0.69 per month or more.
Apple’s hardly alone; the idea of upselling is rife throughout commerce, not least because people are prone to making poor and irrational financial decisions, and are easily led and influenced. (Dan Ariely’s TED talk offers a particularly entertaining explanation about this.)
And as long as you know the tricks being played on you and get a decent device you’re truly happy with, you might argue Apple’s pricing structure doesn’t really matter; but it does take the shine off all the pretty hardware when Apple’s accountants don’t so much arm themselves with a carrot and stick as throw the carrot in the bin and bludgeon to death the low-end of Apple lines with the surprisingly weighty stick.