Is Apple Finally Being Aggressive With Pricing?

iPhone 6s with Apple Watch

The “Apple Tax” is something that a company like Spotify believes is very, very present, but one new article, taking a look at Apple’s pricing for hardware, seems to think we’ve moved beyond it.

Neil Cybart over at Above Avalon has a nice write-up of the current pricing for a couple of different Apple products right now. Namely the Apple Watch (Series 1) and the AirPods. Cybart takes a crack at breaking down Apple’s current pricing policies for these products, and argues, quite well, that Apple is “underpricing” both of these products.

Here’s a snippet regarding the AirPods:

    “It is very difficult to find a pair of wireless headphones priced lower than AirPods. In the run-up to Apple unveiling AirPods this past September, the wireless headphone market consisted of the following players:

    Kanoa: $300
    Bragi Dash: $299
    Erato Apollo 7: $289
    Skybuds: $279
    Earin: $249
    Motorola VerveOnes+: $249
    Samsung Gear IconX: $199
    Bragi Headphone: $149”

With the present list, it’s hard to argue the fact that the AirPods are indeed priced well below the competition. Even when we look at wireless headphones that aren’t truly wireless (meaning the earbuds are connected, but they’re wireless from the listening device), the AirPods are aggressively priced.

At the top of the article, Cybart has this to say about Apple’s pricing:

“In just ten years, we have moved from the “Apple Tax” days, when Apple was accused of pricing products artificially high, to Apple products being priced below the competition.”

To me, this is the most intriguing part of the article.

Yes, the AirPods are underpriced insofar that, like me, I believe a lot of people expected them to cost somewhere around the $250 mark. Cybart even notes that Samsung charging $199 for their Gear IconX wireless earbuds pointed to that possible outcome. But, here we are and the AirPods undercut that expectation — and, probably, the expectation of all those other companies that have their wireless headphones priced so high.

I don’t necessarily think the same thing can be said for the Apple Watch Series 1, simply because outside of the upgrade in processor, the Series 1 is an older device that’s seeing a traditional price drop. It’s cheap, yes, starting at $269, but that’s because the Watch Apple would really like you to buy starts at $369 — and goes up from there.

Apple’s pricing of the Apple Watch Series 2 is pretty typical for smartwatches. Samsung, Michael Kors, Huawei, Fossil, and many others have smartwatches that are priced around that $369 mark. Yes, you can find more expensive alternatives, and there are plenty that are less expensive, but that price tag around $300 and $400 seems to be the sweet spot in most cases.

But, I want to go back to the idea that we’ve “moved from the ‘Apple Tax’ days,” because I’m not entirely convinced this is true. And, even if it is, I think we can safely call it something else: The Apple Experience days. Because while the AirPods are legitimately underpriced to gain traction and attention, this is just one segment.

The iPhone lineup isn’t underpriced, for instance — the company’s most popular device by any measurement. The 2016 MacBook Pro lineup is mostly certainly not underpriced. And if we take those rumors about the iPhone 8 into consideration, that $1,000+ smartphone won’t be underpriced, either.

It seems that if we’ve moved away from the Apple Tax —and Spotify might argue that point emphatically— it’s because we’ve found ourselves secretly in the Apple Experience days. This is the argument that some Apple executives used when the pricing and features of the late-2016 MacBook Pro were announced: Apple doesn’t charge for the features, or the specifications, but the experience they offer with their devices.

Some might say that’s the same thing, because Apple has always valued its own devices as strictly “better than” the competition, so it charged more for it. I don’t think you’d be far off from arguing that point, honestly. I can’t help but wonder if Apple’s pricing of the AirPods only hints at the possibility that we’ll see more expensive options at a later date, probably with more built-in features.

Cybart’s in-depth analysis of Apple’s pricing is spot on, and he’s right when he says that Apple wants to dominate the wearables market. Having so many options of Apple Watch variants helps with that, and covering a wide enough spectrum of pricing certainly doesn’t hurt. But I don’t think we’re anywhere out of the Apple Tax or Apple Experience days. That’s not ever going anywhere. It’s why Apple once charged around $10,000 for an Apple Watch, and why you can still get one for over $1,000. Materials matter, obviously, but Apple’s still selling the experience, too.

One can’t help but wonder if Apple released the Apple Watch Series 3 (or whatever they call it) and truly underpriced it, if they started pricing at $269 and went to $299 for the new models, if they’d fly off the shelves even faster. After all, the underpriced AirPods still have a shipping window of six weeks, so there’s got to be some demand there, right?

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