Economy Size Geek

Why you can’t get iPods at a discount. - By Sean Cooper - Slate Magazine

Apple has done this forever - or at least as long as I’ve bought Apple products which dates back to the 90s. Back in the day the only way to get a deal on a mac was to be a college student and buy it through your University.

If Apple resellers dropped prices on iPods and iMacs—selling at or below cost to get customers in the door, or as a way to cross-sell stuff like software or iPod skins—they could squeeze the Apple Stores out of their own markets.

It demonstrates a lot of market power that they can pursue this sort of strategy. I would love to know what the trade off is - I mean they earn additional profit from the higher prices - but how many people don’t end up buying because the price is too high. I guess we won’t really find out until Apple is in a situation where they stumble and they aren’t able to demand the premium. (Which if you go back in Apple history you wil see a lot of articles about the death of Apple related to this - basically they seem set on the strategy even when the going isn’t go good).

back in collete it didn’t seem as strange to me as it does now. I suppose because I’m one of the consumers they talk about that does a lot of comparison shopping before I make a big purchase. I’m used to finding a deal. On the Apple side, I end up resorting to the - coupon/Google Checkout kind of thing instead of actually expecting to get a better price on the item itself.

One thing that would be interesting to look it is what effect the price stability of Apple products has on their resale value. I would have to assume that since they keep prices high until they release a new unit - a referb or used ipod or laptop would fetch a higher price than say a Dell laptop - since they are constantly cutting their prices and effectively pushing the ceiling down for refurb unit prices.