Apple uses a fantastic array of social psychology when pricing their products. You may have noticed a few more:<p>Price Anchoring<p>At most of their keynotes when they release a new product, they often anchor the minds of the press and buyers. Apple do this by showing a price of £X00 and then saying it's actually much less than that. Look at the transcript of the iPad release:
"If you listen to the pundits, we’re going to price it at under $1000, which is code for $999. Up on the screen comes a huge $999 price. Then: "I am thrilled to announce to you that the iPad pricing starts not at $999....but at just $499."
The much cheaper price now feels like a bargain. It's an excellent sales technique in action.<p>Decoy Effect<p>Similarly, when showing the pricing metric for the iPad, Apple went with showing all the price dimensions together. This highlighted two things: 1) the highest price of the WiFi+3G 64GB model; 2) more importantly, the relatively bargain-worthy price of the entry level model.<p>Value Based Pricing / Emotional Benefits<p>Apple's marketing is mostly excellent. They rarely show the features of the product and more often focus on the emotional benefits of using their products. The famous example is of course using their iPad showing how grandparents can have a video chat with their children and grandchildren.<p>Bandwagon / Social Proof<p>Apple's branding and unique design is perfect for social proof. When you use an Apple product, it's fairly obvious that it's an Apple product. Therefore when potential buyers see this, they think: "All these other people are buying an Apple X, I should get one. They must be very good as so many people can't be wrong".<p>The Nibble<p>Similar to warranties, apple care and other 'add-ons', Apple have employed the wonderful 'Nibble Technique'. Once you've paid for a high price item such as an iPad, a relatively low priced item seems inconsequential. That's why tailors get you to purchase a suit before offering you a tie to go with it. Apple use this technique at the checkout process offering you accessories such as an iPad Smart Cover or an iPhone case. These tend to be low cost items with very high margins - they seem cheap to you, the buyer, as you've just spent so much on the something else. These add-ons can significantly increase sales and more importantly profits.
Note that some of these approaches are not legal in the EU and rules in the markets for some products such as TVs that discussion of MSRPs or RRPs (Recommended Retail Prices) can be an indication of price fixing. ERPs (estimated retail prices) need to be used for internal forecasting ideally gathered from respectable information services such as GfK and if the ERPs were all €x99 that would be suspicious. Routinely asking retailers what prices they were selling at could be grounds for an investigation.<p>One approach sometimes taken (although I suspect not by Apple) is that if one retailer discounts the product the manufacturer supports other retailers to match the discount. This is illegal in the EU as it acts as a deterrent to any discounting as it will get the initial discounter no benefit (market share still ends up shared but they unlike their competitors have to pay the cost of the discount).<p>Despite this Apple maintain tight control of the prices probably by thin retailer margins with money made up by accessory sales and probably some support/discount/payments for retailers who display Apple products according to their guidelines. It is allowable to offer different terms for different types of retailer e.g. dedicated Apple store, store with dedicated area with demo units complying to guidelines or online although it should be non-discriminatory in that any company that sets up to comply with the terms should be allowed.
<i>Apple, however, extends only a tiny wholesale discount on its Macs and iPads to your retailer of choice.</i><p>IIRC there was a discussion on Reddit involving a guy who has made an incredible profit acting as Apple's sole distributor in certain SE Asian countries. I'll see if I can dig up the link. His story tends to contradict the authors statement above.
This article either misses the point or just got the wrong headline. The article is about the mechanics of how Apple maintains price discipline in the channel. Apple sets its prices, and is able to maintain that channel discipline, because they understand that price is determined by perceived differential value.<p>They try to make things that people will find valuable. Since they have done a great job in a number of categories, they can set the price, and effectively dictate the terms to retailers. Other manufacturers use similar channel pricing mechanisms, but lack the clout to make them stick as well as Apple.
The article doesn't mention one of the most interesting components of their pricing strategy: the "price umbrella."<p><a href="http://www.iamconcise.com/main/the-reason-for-the-ipad-mini.html" rel="nofollow">http://www.iamconcise.com/main/the-reason-for-the-ipad-mini....</a>
He left out an important point: Apple invests marketing dollars that the retailer shares in. When you see Apple products in a weekend flier, Apple <i>paid</i> for that placement (so did other brands). All of this also falls under the banner of "co-op advertising."