Why is Apple so expensive?

Why is Apple so expensive? 

It is now not a secret that Apple has the power to change the world, and not just the world, the whole world. Whether it was the one that  fell on Newton’s head or as we’re witnessing the Apple’s products founded by Steve Jobs, that has tremendously amazed us with the superb use of technology, Apple is just  over the top. The technology giant has never and will never bring any cheap product to the market. But why? Leave alone Eve's apple, today's video is about Steve Jobs' invention and why their products are costing a bomb. Enjoy!

Number 8

Brand value

Apple has been successful in establishing itself as a “lifestyle brand”. People don't always mind paying extra to flaunt the brands logo. Part of the image being a luxury product in the minds of the users is because Apple over the years has unremittingly focused on high-end products and has specialized in that area. Especially after the launch of the original iPhone, the company has been more focused on design , functionality and component quality than the consequent value. This applies to bigger products like iPads and MacBooks.

Apple’s brand value has seen some tumultuous changes throughout the last decade, but in 2020 it stood at an impressive 352 billion U.S. dollars. In fact, that year Apple managed to secure the second spot in a ranking of the most valuable brands worldwide, second to Amazon, and ahead of Google and Microsoft.

Number 7

Research and development 

Beyond purchasing  high-grade components, which increase the manufacturing cost, Apple also invests heavily in research and development. They are always in search of innovation and streamlining the manufacturing processes. All these put together, dictates that Apple products are expensive  to produce.

It’s also a no-brainer that Apple is very careful about selecting the components for its products. Supply for the carefully chosen components can become a constraint, and if the supply cannot keep up with the demand, the prices shoot up, making Apple products expensive .Apple spent $4.2 billion on research and development in the quarter ending in June this year, the highest quarterly amount it has ever spent on research and development, according to its quarterly earnings statement.

Number 6

Proprietary software

Apple products come with their own proprietary software, which is owned and maintained by Apple. This is unlike Android, which is open source, wherein manufacturers get the operating system free from Google and tweak it slightly to match the hardware they intend to use it for. 

However, Apple needs to develop and maintain iOS, MacOS and back-end services like iCloud and iMessage all by themselves, which also elevates their operating costs. This gets added to the price of Apple products making them so expensive.

Apple uses proprietary components which gives them control over the design. Instead of having to design their computers around standardized components, they can design the computer and then the components to fit inside of the computer. Other computer OEMs can't do this because they don't have high enough margins to pay the costs of custom designing every component. 

Apple has the money and manufacturing power, as well as the supporting margins on the end product, to support this level of design, which is why it allows them to push to the extreme when it comes to product design. The original MacBook Air used a custom-made super thin HDD that was closer to an iPod Classic HDD than a laptop one. Apple's design decisions and custom components allows them to design the products they do.

As for tangible benefits, each of the components has a good reason for that decision. Integrated batteries allow for better power management which is why, in combination with their custom OS, Apple computers have an almost unmatched, best-in-the-industry battery life. It also allows them to distribute the battery cells around the computer, maximizing the use of space and limiting battery barriers. 

Integrated RAM allows for lower latency, improved speeds, and customized firmware for better performance. While there is little tangible benefit to their customized SSD controllers, there is also little benefit to Apple to using standardized ones. This can serve as a value-added  proposition for users who want a robust Apple ecosystem. This is because experts reckon that an integration of software and hardware- the case with Apple- allows for optimal performance and reliability with less susceptibility to malware.

Number 5

Customers  willingness to pay more

If you happen to be an ardent Apple fan, one of the things that entices you to the brand is that you get an entire ecosystem with the product, wherein everything gels with one another. Whenever you  log in to a  Wi-Fi connection  on your iPhone and come back with an iPad another time, the password automatically transfers from your iPhone to your iPad. 

Similarly, when you make a purchase in the App Store, that app will work on all your Apple products without the need to pay any additional fee. This makes owning an Apple device a more fulfilling and rich experience; as a result, customers don’t mind paying extra for Apple products!

Number 4

Apple's taxes

Over the last decade Apple paid over $100 billion of corporate income tax on its total US domestic and international earnings. Under the current international tax system and OECD transfer pricing principles, profits are taxed based on where the value generating those profits is created.

Number 3

Iconic Apple Stores

Apple stores are the face of Apple. If you are techy by nature I would recommend you visit an Apple store you will definitely like and love it. Apple Store was not present in India, until on 23rd September 2020, when they  launched the Online Apple store in India. 

Going straight to  the point, Apple heavily spends on its stores. These Apple stores are located in the most premium places in the richest cities.

Almost every luxury brand spends heavily in marketing and branding. Recently, Apple launched its floating Apple Store in Singapore.

There's also another Apple Store in Shanghai, China, the shanghai-apple-store.There are more than 500 highly attractive Apple Stores across the globe, and none of them looks ordinary. The beauty of the architecture of these Apple stores needs heavy investments in construction and maintenance.

So, who do you think  will pay for it? Of course, you, as a customer.

Number 2

Premium Lifestyle Brand

Every brand has a positioning in the market.Apple has managed to successfully build its image as a premium lifestyle and luxury brand. It never targeted the middle or poor class people. For instance, Xiaomi is the king of budget smartphones while OnePlus provides the best value for the money.

Even Microsoft has its own positioning. Bill Gates once said, “A computer on every desk, and in every home, running Microsoft software.” Microsoft has its own target audience and respective strategies.

Similarly, Apple has managed to show itself as a premium brand. If someone is using an iPhone or a Macbook, that person is automatically assumed to have a luxurious lifestyle.

Apple even launched its ‘budget’ iPhone in 2020 under the name of iPhone SE and that doesn't go for a penny.

Apple has never been to mid-range or budget lines. It has always remained at the top of luxury brands.

This is the reason why almost every movie, celebrity, businessman, etc involuntarily promotes the brand.

In fact, Apple is so obsessed with its image and positioning that it does not allow villains in the movies to own an iPhone.

Number 1

Increased storage and memory

Storage is now so cheap and  almost irrelevant, but Apple monetizes this difference with consumers, to the tune of $100 for each additional step up in memory capacity. 

For example, a 64 GB iPhone now costs Apple about $17 more to make than a 16 GB iPhone, but Apple charges iPhone buyers $100 more for the increased memory. This is part of Apple’s ongoing strategy to improve profits by selling a product mix that is heavier in the higher-end iPhones thus making apple products so expensive.

Outro

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