Apple Inc. – A Gigabyte Marketing technique

As we all know the pricing of apple product is based on the storage capacity i.e., Gigabyte. For eg., if we take the price of iPad with retina display ( Wifi model ) 16 GB costs 499$ ; 32Gb 599$ ;64Gb 699 $. Similarly this pricing technique holds good for iPhone and MacBook. But with MacBook air , the pricing technique goes with GB and screen size. 11 inch 128 GB costs 999 $ ,256 GB 1199 & and 13 inch 128 GB costs 1099 $ ,256 GB costs 1299 $.In most of the apple products rest of the technical specification remains constant.

But if we analyze with economic tools ie., if we calculate costs per GB in case of iPhone 5 , we will arrive with the following figure:

16Gb iPhone costs 40.56 $ per GB i.e., it costs 649$ so 649 divided by 16 is 40.56 $. Similarly 32 GB costs 23.40 $ per GB ( Price = 749$) and 64 GB costs 13.36 $ per GB ( Price = 849 $).

Does manufacturing costs rise as the Gigabyte increases ? Why it is priced based on big numbers ? Why apple number based pricing is better than other brands ? Let us see briefly.

The manufacturing cost rise is negligible when compared to Storage space increase. The reason why it is priced on big numbers is “ we human beings are excited with the big numbers “. In day to day life how many of you have seen people get excited to Big engine car , Big house , Big Shopping mall , Big biceps , Tall guy ,  Big ship, big park , big lake etc., For eg., people get excited towards 5 liter engine than a 3 liter engine. No matter thinking about its utility, driving comfort , pollution generation, handling etc., Big number and “ free” attracts human beings. Thus the numbers in apple pulls us. Number is the gravity and people are objects in market universe. And we all know that we can buy a 1Tb hard disk for 100$.

 For eg., if we chose some other brand like Lenovo, Samsung, HP, Dell , Toshiba etc., The pricing is based on a variety of technical specifications like processor , graphics card , flexible , slim , ultraweight , screen resolution etc., They often confuse the costumers with a variety of brands with a variety of specifications. How many of us preferred 750$ laptops over 650 $ laptops and found there is no difference in utility for us personally when compare to cheaper laptop.

This is the reason apple marketing and pricing technique is unique than other brands. If the pricing is based on a variety of specifications , then there is a complication. The complication will lead to chaos. Simplicity is the ultimate sophistication.Most of the high end car does the same pricing technique by keeping the other technical specification constant and they increase the Engine capacity, with special design and claiming it as a special edition.

When we choose the product we should think rationally and we should analyze whether this model is useful for us. We should not fall prey for the numbers because big buildings in New York is not more beautiful than small buildings in Rome. After all we can save this money to take the loved ones to Rome.



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