Usually Apple releases three versions of the product that are separated by the storage dimension. In the past it was 16GB, 32GB and 64GB. And the versions increase in price by the standard $100,” Rags Srinivasan writes for Iterative Path. “That changed with iPhone 6.”
“There is no 32GB version. For $100 more instead of getting just 16GB more or 32GB for another $100 you now get lot more. Instead of 100% more for $100 more and 300% more for $200 (more than base version) you now get 300% more for $100 and a whopping 700% more $200 more than the base version,” Srinivasan writes. “”
“What Apple is doing is a simple case of price discrimination done right. It is an effective lever for them to get customers to self select themselves to the version that is most profitable to Apple,” Srinivasan writes. “Let us say the unit numbers stayed the same (likely will be higher given the unprecedented demand we are seeing). Let us assume a conservative rate of 25% to 30% of people will willingly choose the 64GB version. Let us give a high end cost of $16 for the additional 48GB storage. Just for this limited and conservative scenario… That is close to $4B in new profit just by keeping the base version at 16 GB.”
Read more in the full article here.
[Thanks to MacDailyNews Reader “Dan K.” for the heads up.]