Apple skimming pricing strategy

Apple’s success has become a model for the business world, its attracted much attention of the business community, At the same time there are a lot of people have started to explore Apple’s success and try to learn it. Base on the research, we understood that the success of Apple has supported by a lot of factors, which including: Apple’s unique creativity, hunger marketing strategy, Apple’s amazing teamwork, etc., but never forget, Apple’s pricing strategy is also important as a factor.Apple-prices

Apple is persisting the skimming pricing strategy, The skimming pricing is to set a high price for the product in order to grab the maximum profit in the short term as the goal rather than to get the maximum sales. Focus on the Apple, before each generation of new products come out, they had already stirred up the consumers’ psychology infinite curiosity and expectations, then when a new product start sales in the market, its quite high price makes a lot of consumers stay away. However, despite its relatively high price, it has still not reduced its sales, instead, it is actually more robust  the high-end image of Apple in the minds of consumers, and get a magnificent sales in the market, at meanwhile bring a lot of loyal customers. However, just at the time of the sales is still running well and the market has not saturated, Apple has started to develop the latest generation of products, the old products begin to reduce the price. As a result, before the latest product is not yet available, the current product has become hot products, market coverage has reached a considerable height, it opened up a broader market for the advent of new products. In the latest product comes out, their price is even higher than the previous generation, but its sales are still good. That’s why the Apple’s skimming pricing strategy can obtain a good result.

 

There are several reasons that why Apple are adopt the skimming pricing strategy.

  1. High price = High profit

Development of new products at higher prices, it can get profit as large as possible in certain sales, conducive to get rapid return on the initial investment of new products, and to provide capital to further expand the scale.

  1. High price base on the product positioning

Apple’s target market is the high-end consumer, thus this market position is supported the product pricing.

  1. Suppress competitors.

The new product priced higher could prevent several new competitors entering the market in a certain extent.

  1. To meet the psychological needs of consumers.

Apple chose this pricing strategy, its most fundamental essence lies in its consideration of the psychological needs of consumers.

 

So, Why Apple’s pricing strategy can be success. First of all, there is a very strong brand to make support. Secondly, there are a number of customer with strong purchasing power and not sensitive of price. Moreover, the amazing speed of replacement the new products in whole industry.

 

To sum up, a good product pricing will not only help to improve sales revenue, but also help enterprises to establish a good relationship with customers, however, to develop a good product pricing is very difficult, if the companies make a slightest mistake, the improper pricing phenomenon might be occurred.

 

Reference

Marco T.,2013. How apple set its prices, Macworld Vol. 30 Issue 4, p16-17

Dmitriy and Dmitri, 2014, ECONOMICS OF APPLE IPHONE: PRICE DISCRIMINATION OR PRICING ERROR? Journal of the International Academy for Case Studies Vol. 20 Issue 1, p49-53

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