Apple is a global tech giant. The brand keeps on innovating and provides the best piece of technology. But Apple has always been expensive. In its stride to provide the best in class tech, Apple charges a massive amount of money from its consumers. Is the extra money worthy enough? Do people just pay for the brand name? And most of all, Why Apple products are expensive?
To start with, let’s go through some key stats of Apple.
- $1 Trillion – Apple’s net worth
- $1.3 Billion – iPhones Apple has made
- 2 – Apple’s Rank as Most Valuable Brand
- 10 Billion – request Siri receives every month.
- $11.6 Billion – Apple invests in Research And Development.
- ₹26.5 Billion – Apple paid to iOS Developers last year
- 87 % – Smartphone profits apple earns
- ₹258.1 Billion – Apple’s Cash Reserves
Despite such high prices, Apple has maintained its legacy as the top Moneymakers of the industry. This is only possible with the help of die heart apple fans. Apple fans are ready to pay extra bucks just for the brand name. But WHY??
Let’s dig down deep into Apple’s monopoly and see Why Apple Products are expensive?
THE BRAND NAME
Apple is no longer just a brand, It has become a style statement. Everyone wants to have an Apple device, but not everyone owns it. The brand has made its name through aggressive marketing strategies. Apple has always played in the premium budget segment. Premium brands might not have the highest sales, but they surely have a quality customer case. The Apple fans are willing to pay a huge amount just for the Apple logo. The Apple logo at the back of the phone just says it all. The people are more fascinated by the brand than the values it offers. Apple just strategizes around the fact that Apple products will be sold anyhow. Cheaper Apple products tend to degrade the brand’s value. Apple price their products at an exceptionally high cost to maintain its brand value.
This term used for a network of devices and services the brand has built up around its customers. Apple Ecosystem is one of the most important aspects of Apple’s global success. Let’s have a look into Apple’s Ecosystem.
Apple provides its own services like Mac OS, iOS. iTunes, Apple Store which is a way more different and efficient than the competition. Once you own an Apple device, you become part of the Ecosystem. An Apple user gets used to the interface and features the brand offers. Studies show that, if you buy an Apple product, you are more likely to upgrade to Apple for your other devices too. for example, if you buy an iPhone, you are more likely to upgrade your laptop to Apple too. Apple provides a highly sophisticated network between its device. It’s easy to communicate between the Apple devices. Apple takes the full advantage of its Ecosystem to charge the higher cost. Apple just binds its customer in the never-ending Apple Ecosystem. It’s not easy for an Apple user to shift to other services.
Apple is known to provide the best in class and quality products. A major portion of Apple’s revenue goes into its Research And Development. According to the stats, Apple spends $11.6 Billion dollars in R&D. Apple uses the best quality materials and provides an experience like never before. The best part of Apple’s quality is that it uses only the premium materials. In fact, the latest A 12 bionic chip by Apple has a score of 3,63,525 (multicore) which beats its competitor, Qualcomm Snapdragon 855 with a score of 3,57,899 (multicore).
The best quality comes with a bane of difficulty in repairing the devices. Apple tends to make its internal structure if its devices are more and more complex. This restricts the owner to get the repairs done from local markets. This thereby brings more and more revenue to Apple. The brand simply offers the best tech in the market. The best examples of these are multi-directional Face ID in T Pad pro, A12 Bionic chip, low latency touch pencil etc.
When it comes to the software, Apple has one of the most sophisticated software resources. Apple invested a huge ₹26.5 Billion in its developers to build the most seamless and the best software experience. In an interview with CNBC, Tim Cook said: “Make Best Not More”. Apple runs on the simple principle, just make the best even if costs the most.
RESEARCH AND DEVELOPMENT
Research and Development stand for the investment a brand makes to bring about new innovations. Apple is always known to be one of the most innovating brands. In fact, Apple invested a warping $11.6 Billion in its Research and Development. Research and Development of a brand is one of the most important aspects of a companies product quality and pricing. Apple is the 7th in terms of investment in R&D.
By R&D we all the resources that go up in making a beautiful piece of technology. This includes new tech, experiments, skilled staff, large scale production etc. It is a general trend that it is easy to develop an IOS app than any other platforms due to its lower database and stable OS. Due to this, updates are guaranteed in Apple devices. The massive investment in R&D adds up to expensive Apple products.
MARKETING AND MANAGEMENT
Marketing is always a key factor in the success of a brand. Apple is no exception to it. The brand invests a huge amount of money in its management, advertisements and marketing.
Apple has its high class and lavish Apple Stores around the world. Apple often organises workshops. These take a huge amount of cost in its maintenance. When it comes to marketing, Apple has one of the most influential marketers in the world. In every launch event, even the slightest of innovation is shown as a big deal by the presenters. Apple is always known to boast about its new products. The brand never specifies the exact details but always go deep into comparisons with the previous generation. This is one of the best ways to present a new device. The users never come across the shortcomings of the device. Often other companies lack these skills and are unsuccessful in marketing despite the better features.
Frankly speaking, Apple just doesn’t need high investments in marketing, the brand name speaks itself. But still, Apple invests a whole lot of amount in advertisements on Social media, hoardings etc. The aggressive marketing strategies by Apple add up to its cost.
Apple is the most profit earning smartphone brand in the world. Profits are the main reasons for expensive Apple products. Apple earns 87% of profits in the smartphone industry with just 18% market share. It is always seen that Apple always strives towards earning more and more profits. In its run to earn the most profits, Apple often cuts the basic necessities a customer expects after spending their hard earned money.
Recently, Apple removed the headphone dongle from the box of a $1000 device. The brand is often seen taking advantage of the slow sales policies. The bill of materials o iPhone X was $357 but the device was sold for warping $999. They restrict their product availability and hike the price. The brand is often seen using its name and selling the same old tech at a huge price. The brand was alleged to slow down its older version devices thereby insisting the users to buy a new Apple product.
To sum up, these were some of the key reasons to question, Why Apple products are expensive. Some of these were the business reasons and some were just a profit-making deal. Let us know about your thoughts below in the comment section. Hope you liked the post.
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