Why apple products are so expensive?

In 2016, the iPhone Seven started at $649. Three years later, Apple's flagship iPhone costs 54% more. It's even more dramatic for the Mac mini.

When Apple released its new model, the price increased by 60%. These prices bring in huge profits for Apple. As the US is the first trillion-dollar company, Apple's market cap is higher than the GDP of Switzerland. So what makes Apple products so expensive?

Apple has over the years built a reputation for quality and the industrial design of its products. That reputation has created millions of loyal customers. So brand loyalty translates into a premium that they're able to extract from customers who are unwilling to switch out of the Apple ecosystem. That premium is also known as the Apple tax, or paying more simply because it's an Apple product. The 256 gigabyte MacBook Air, for example, costs $1299, but you can get a more powerful Windows laptop for over $100 less. Apple's high prices reached mean proportions during the announcement of its Mac Pro in June 2019, Claps turned to gasps when John Ternus unveiled a $1000 monitor stand as an add-on for the $5000 Mac Pro display. Fall in truth $6000 for a professional reference monitor of this quality is comparable to the competition. But that didn't matter. Apple had botched the messaging and it's $1000 stand became infamous. Apple does something else that's a bit sneaky, which is that when you're buying the iPhone you can't add memory to it. So if you want more memory, you have to pay more Apple tax. With Apple's computers, these upgrades get even more expensive.

If you want a 13-inch MacBook Pro with 512 gigabytes of storage, you have to pay $400.00 more than the base model. And Apple's accessories also have high premiums compared to non apple products like its $129 keyboard or its $79 mouse. Even Apple's cables cost more. Apple has kept its proprietary Lightning connector while removing useful ports like the headphone Jack and the SD card reader.

Forcing consumers to buy expensive dongles like it's $39.00 SD card to USBC reader. But are these products worth the premium? Apple loves to talk about its innovation. These are the most powerful and most advanced iPhones that we have ever built in a stunning new design. An iPhones have added great features like OLED displays, faster processors, and thin bezels, but competing products have many of the same features. The components that go into making a smartphone are fairly standardized. For example, Sony competes with Apple in smartphones, but all of the camera sensors that go into an iPhone are made by Sony. And those components cost a lot less than a new iPhone. The Bill of materials is about $490.00 for a phone that is priced at $1099 as a comparison point, the Galaxy S10 plus is about $420 Bill of materials for a price of $999.

Something changed when Apple released the iPhone 10. Not only was it more expensive, but the difference between the Bill of Materials and the retail cost was much greater. Obviously, Apple wants to make a profit, so the Bill of Materials has to cost less than the device. What makes Apple special is its ability to pull larger profits than its competitors.

Instead of a technology company, think of Apple as a luxury brand. As with Gucci or Hermes, customers pay more because the logo is a status symbol. That handbag isn't a more functional bag, but customers still value it more. So our products become an extension of our personality, our value elegance, our value design, our value, simplicity, our value it just works and that is what inspires a lot of loyalty and allows Apple to extract a premium for their products.

Why are Apple products so expensive? Are the designs very sleek? I think because they make premium hardware and people are willing to pay for a simple seamless experience. They're catering to people that really, that really love the ease of use and user-friendliness, and I think that probably that layer of design costs a little. I think that customer loyalty is hard to earn, but when you do earn customer loyalty, love is blind. But this strategy might not work forever. Competition with less expensive Android phones has got steeper, and that's put the iPhones market share at risk. Apple's performance in India is pathetic. Pathetic to the point that their market share has now slipped less than 2% has become completely irrelevant, and the primary reason there is that the price points are simply unaffordable for in the Indian market.

 If Apple can't sell more iPhones, it might have to sell fewer iPhones for more money. Charging a premium allows Apple to keep increasing its revenue. Even if its biggest category, the iPhone is declining. See whenever you create a new product, what you want to do is to extract all of the premium that you can from the higher end customers. People who are willing to pay a premium. That means the customers who buy the iPad Pro or the $5000 iMac Pro. Apple does offer cheaper models like the iPhone 11 or the 11 inch iPad, but those aren't always the models customers choose. This is called extremeness aversion, because you don't want to buy the cheapest, you don't want to buy the most expensive, so the middle one looks like a compromise. But that Apple has a disadvantage compared to true luxury brands Or luxury product.

  That you'd keep it for a lifetime. You can't keep a smartphone for a lifetime. So premium? Perhaps not luxury. For now, Apple's reputation remains strong and the customers who don't want to spend $1000 on a new phone, Apple has a plan for that. Keep the old models around just at a very slight discount. But if Apple wants to keep its loyal customers, its innovation will have to keep pace with its premiums.