You can not put a price on loyalty. Just kidding, it's $ 1,000.
Apple this year became a trillion-dollar company. But it also became the thousand-dollar company: suddenly you need at least ten Benjamins to get the best new iPhone or the big iPad Pro.
Apple has never made cheap stuff. But this fall 20 percent or more. The MacBook Air went from $ 1,000 to $ 1,200. A Mac Mini leaped from $ 500 to $ 800. It felt like the value proposition that has made Apple products no-brainers might unravel.
For some perspective, we will be able to provide you with the iconic Apple products. Then we compared them to other brands and some proprietary data about Americans' phone purchase from mobile analytics firm BayStreet Research.
What we learned: Being loyal to Apple is getting expensive. Many products are rising faster than inflation – faster, even, than the price of prescription drugs or going to college. Yet when Apple offers cheaper options for its most important product, the iPhone I know while I'm definitely extracting more money from frequent upgraders.
Apple says prices go up because it introduces new technologies such as FaceID and invests in making products that last a long time. However, it has clearly been a feeling of discomfort from some quarters. This week, it dedicated its stock out of the trillion-dollar club, it dedicated its home page to a used car sales technique that is uncharacteristic for an aspirational luxury brand. It is offered to "limited-time" deal to trade in an old iPhone and get a new iPhone XR for $ 450, to $ 300 discount.
Apple offers trade-ins for many products now. Apple has gone up in price: An entry-level iMac and iPad have gotten cheaper since 2014, although in both cases the company has since added to new higher-end (and higher-price) "Pro" version to its lineup .
It's a good time to take stock of what you're paying for. Back at the end of 2014, when the iPhone 6 came out, the average price paid for any iPhone was $ 634, according to BayStreet. This year, it'll be $ 898. (Samsung owners over the same period went from $ 635 to $ 710, not accounting for promotions.) Adding services such as iCloud storage and AirPod headphones.
Our charts of Apple's rising prices are like a Rorschach test: "Some see a tech giant" gouging us more for ho-hum upgrades. Others see the increasing usefulness of Apple products in our lives.
What we see is a new reality for consumer tech. Most Americans who want to smartphones, tablets or laptops already have a new one. Without big subsidies from phone carriers and as a product innovation slows, we also do not mind We are getting money from us. So we need to change how we think about its value.
Why Apple charges more
Most technology products are commodities that actually go down into price over time. Apple has worked very hard to become a commodity.
Take the MacBook Air, the entry-level laptop, which at $ 1,000 became more common in U.S. college dorms than futons. After reading the laptop's features for the first time on Apple, we updated the Air in October with a new screen, processor and fingerprint reader. Oh, and that 20 percent price bump, too.
Laptop is fierce, and by many measures the new Air can not compete with a Windows 10 model like Dell's XPS 13. For the same price as a new Air, the Dell offers a faster processor, more flash storage – and it weighs less, too.
But the specs hardly matter. As any member of the Apple tribe will profess, it's selling more than sexy hardware. It's an Apple-only stuff, like iMessage and iCloud – a (mostly) happy trap that's hard to leave. You're buying access to those Apple Stores and customer service, not to mention Apple's aggressive stance on privacy.
Sure, there are things Apple is not the best, including smartphone cameras and voice assistants. The needle is not as good as a competitor, it does not much move the needle.
Apple is not totally ignoring budget shoppers. The iPhone is now available in an incredibly wide band of prices because Apple keeps around older models and drops their prices. You can get an iPhone 7 for $ 450 (or 6S or SE for even less through a retailer) or maxed out iPhone XS Max for as much as $ 1,450.
The paradox is that many Apple customers think they must have the latest, trained by Apple marketing to future-proof ourselves. I know this year, instead of buying a year-old iPhone 8 at a discount or an iPhone XR, many customers are just skipping out on an upgrade altogether. "People are looking at the R as the step-down product. Like it's less than a smartphone, "says BayStreet's Cliff Maldonado.
Apple as a luxury good. When are you spending that much? (No surprise, Apple's head of retail is the CEO of Burberry.)
The question is: How to make Apple's latest and greatest prices? "Apple is becoming aggressive, perhaps overly so, in pricing the top-of-the-line models of its products," says Rafi Mohammed, a pricing strategy consultant. And that is "putting its loyal relationship with its core customers at risk."
Back in 2014, Americans waited about 24 months to upgrade their phones at national carriers, according to Bay Street. Now we're waiting almost 36 months. People will ride their iPhone 6S until its wheels come off.
The reality is smartphones, like laptops and tablets, have not been getting dramatically better. There are some interesting new technologies on the horizon. That was not true in the earlier days of smartphones.
Ben Bajarin of Creative Strategies says, "I could see it going to four years". Especially when software upgrades keep coming through: Apple's latest, iOS 12, still works on an iPhone 5S from 2013.
We are looking for three or four years. That's just a hard thing to see.
And Apple has another trick to get more services and accessories. It's got AppleCare + for you to crack your screen, Apple Music for entertainment – and more likely to be in 2019. Then there are stocking stuffers like cases, ludicrously overpriced dongles, or if Santa's feeling is very generous, AirPods and Apple Watches. A certain Apple logic kicks in: I spent so much on this, maybe I'll spend even more on it.
Apple made 16% of its revenues from services in the most recent quarter, and not as long as it was announced.
Apple is loyalty is getting hard to swallow? There's always the option of moving to a different tech tribe. Apple solves, though Google is trying to replicate some aspects of the experience with its Pixel smartphones and Home speaker devices. (Those products are not much cheaper, though.)
So far, there's little evidence many are interested in switching. "I'm going to switch to Android," says Bajarin. "Your regular consumer just wants guarantees. They are trying to know what they're familiar with. "
Instead, you might ask: How many Apple products do you really need? HomePod to listen to music. (It's now easier to avoid that hardware: Apple last week announced it would make Apple Music subscriptions available on Amazon Alexa devices such as the $ 50 Echo Dot speaker.)
It's about recalibrating our upgrade urge. Apple devices are really long-lasting, but they are still very expensive. Apple is offering through the end of the year. If your iPhone breaks, you can use it on eBay.
Or: Before buying the new thing following Apple's launch events, wait a month until the buzz settles. If the product does not seem to be very revolutionary, it is a safe bet to save your money by holding on for another year. Or four.