Why Pay The High Price For Apple?

Apple has enjoyed the lion's share of the tablet market, for years now; in January to March 2011, alone, over 4.5 million iPads were sold worldwide. Yung Trang, President of TechBargains.com, shares the truth behind who's buying. A recent survey showed that 48% of consumers said they were going to buy Apple's new iPad and of those 74% concede that no tablet compares to an iPad. With a higher-than-average cost to procure one of these iAnythings, however, it may be worth asking "why do people continue to pay more overall for Apple gear?" We look at some of the factors behind why people continue to fork over big bucks for the big brand.

Brand "Belonging"
One reason that so many people ignore the price tag of a new Apple device, and buy with unquestioning urgency, is that the brand name "Apple" means something to many people. There is also a feeling of security that the company has been able to instill in its loyal customers. Justin T. Esgar, CEO of Virtua Computers, an Apple consulting firm in Manhattan, shares that years of PC issues have made his clients feel better about buying Apple products. While the common computer-related issues were years ago, "they switched to Mac and stuck with it." He also shares that the familiarity of Apple has kept them around for the new product launches, and helped bring loyal customers on board with the new innovative tablets and phones Apple offers.

A Sound Investment
Another sound reason for paying extra for the Apple brand is that the products seem to hold their value very well. The market has proven that, because people are willing to shell out big bucks for the latest brand new Apple offering, the gently-used version will also command a pretty penny. Yung Trang comments that people can get around $350 for their used iPad 2 on eBay. "For an electronic to retain value of over 70% is absolutely unbelievable." The same may not always be said for competitive tablet brands, something that die-hard Apple fans have in mind when they upgrade to the latest and want to cash in on last year's model.

Perceived Value
Finally, there is still a common thought among Apple owners (iPad enthusiasts, especially), that they are getting a great buy for the money. Daniel M. Ladik, PhD, and Associate Professor of Marketing at the Stillman School of Business, explains it this way, "Until competition can come close to the value equation - i.e., you get what you pay for - that iPad offers, Apple can command that premium price." He goes on to admit that what Apple pays to get the product made and how much margin per unit Apple earns is not relevant to consumers, just analysts. Consumers continue to give their approval of the pricing model with their wallets, something that proves the price is not hindering Apple in any way.

The Bottom Line
Apple recently dropped the price of their iPad 2 model by $100 in preparation for their newest model. The TechBargains study, however, suggests that not everyone is on board with the "value" that Apple offers.

"The main reason 16% of shoppers surveyed said they would not buy the new tablet and 36% remain undecided is because of the high price tag. Even most of those who said they won't buy the iPad who have an annual household income of $150,000 or more, say the iPad is too expensive."

It appears then, that for many, price will never likely be an issue. Those who refuse to pay the big prices to be part of the Apple story likely wouldn't have been the market Apple was looking for, anyway.



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