Apple has always been characterized by being a premium company, with high prices in exchange for a magnificent product. However, in recent years, Cupertino has not been the most expensive company compared to the competition and other companies such as Xiaomi or Samsung have even raised their prices above the bitten apple mark. What is this about? Keep reading and we’ll tell you everything.
One of the aspects that the American company knows how to best take advantage of is its profit margins. The fact of having a brand value much higher than the competition prevents exponential price increases in its products, improving its positioning in the market compared to the rest of the companies in the sector.
When production prices rise, the profit margins of all companies are reduced, but proportionally, Apple’s are reduced less due to all of the above and also due to the in-house manufacturing of more and more components, allowing for cost savings. .
In this situation, the company run by Tim Cook can play with a slower price increase or not increasing its price directly. Maintaining prices is equivalent to selling more units and, therefore, an increase in income. Competition, on the contrary, tends to raise them so as not to put the financial stability of the company at risk and, therefore, they become less competitive in markets where they were previously competitive.
The users of Apple we are used to paying a high cost for a productbut other users are not willing to make such an investment, so if they see their favorite brand raising prices, they can change companies or what is currently happening happens: “to pay 1,000 for an Android, I’ll buy an iPhone” . For this reason, Apple does not raise prices so much, because it compensates it, it gains market share and on top of that they fall within its ecosystem of services.
Apple is a services company
The iPhone is a fundamental pillar for Apple, where a large part of the company’s income comes from it. Since the arrival of Tim Cook as CEO of the company, he has been carrying out an income diversification policy with the aim of not being dependent on the best-selling phone in history.
In this situation, Apple wants its main devices to become ports of entry for other purchases and services. For example, if you have an iPhone, it is very possible that you will end up buying an Apple Watch or AirPods. But it doesn’t end there, as services play a special role in Apple’s organizational chart. In this sense, services such as iCloud, Apple Music or Apple One increasingly represent a larger piece of the pie for Apple.
The iPhone is the company’s flagship product, but what makes it truly incredible is everything you can access from it. Apple knows this and is increasingly promoting this synchronization, which is not limited to its accessories, but extends to other company products such as the iPad or the Mac.