Recently, Above Avalon‘s Neil Cybart wrote an article entitled “The Curious State of Apple Product Pricing”. In the article, the analyst talked about Apple’s underpricing strategy as a way of encouraging more people to explore their options with Apple’s products. This is what the company has done with its newly lowered prices on both the Apple Watch and the AirPods.
According to Cybart, this kind of strategy would have been “unimaginable” for Apple to do around ten years ago. Around the same decade, Apple had been accused of putting an exorbitant price tag on their products. This was referred to as the “Apple Tax.”
Except for the Bragi Headphones (which cost $149), Cybart noted that all other competitions were more expensive than the AirPods’ $159 price tag. The next option would be the Samsung Gear IconX at $199 while everything else was priced over $200.
After reducing the price on the AirPods, its competition followed suit. Earin reduced the price of its wireless headphones from $249 to $199. Motorola joined in on this trend by repricing the VerveOnes+ from $249 to $189.99.
The analyst believes that this was Apple’s attempt at forcing its competitors to compete better with the wireless headphones they offered by reducing their prices. But even with these discounted prices, Apple’s AirPods were still far cheaper than the rest of them.
The AirPods are said to start shipping in six weeks on the company’s online store.
Cybart discovered the same underpricing strategy being applied on the Apple Watch Series 1 models. At its current $269 price, it is already among the lowest-priced smartwatches available in the market. Even the Apple Watch Series 2 is another suitable option since it has a price of $349. Its biggest competition (in price) is the Fossil Q Founder, which sells for $275; and the Samsung Gear S3, which sells at the same price as the Apple Watch Series 2. Everything else is priced higher.
The analyst shares that the attractive pricing on the Apple Watch was a key factor that resulted to record sales of the devices last holiday quarter. He also believes that this underpricing strategy is Apple’s attempt of capturing the entire smartwatch market.
Cybart believes that with this underpricing strategy, Apple is giving a new meaning to “luxury” by offering reduced prices on a luxury brand. The analyst believes that this is something other tech companies will have a difficulty competing with. Still, Apple has not ruled out the option for the ceramic Apple Watch Edition for luxury markets by pricing this at $1,249 compared to the $269 price of an entry-level Apple Watch. Not to mention, there are still plenty of other undoubtedly expensive Apple products; such as the recently released 15-inch MacBook Pro with Touch Bar (starts at $2,399), the 12.9-inch iPad Pro (starts at $799), and the iPhone (starts at $969).