Price of Apple Watch Is Key To Its Survival

Posted by Kirhat | Monday, March 16, 2015 | | 0 comments »

Apple Watch Prices
How can a firm determine the price that they should charge for their products? What should be the reasonable price?

In economics, price should be set at levels where the consumer is happy with and will buy the product at that price. Price is also set at a level where the firm can make a profit from selling the product.

In Apple’s big Spring Event last 9 March, the tech company provided the new price for the Apple TV and a new MacBook model (along with updated MacBook Pro and MacBook Air models). However, what everyone was expecting are the prices Apple has set for each of the models of the Apple wearable.

Tim Cook revealed the following prices for the various models of the Apple Watch:
  • Apple Watch Sport – 38mm: US$ 349
  • Apple Watch Sport – 42mm: US$ 399
  • Apple Watch – 38mm: US$ 549 – US$ 1,049 (Prices vary based on watch band)
  • Apple Watch – 42mm: US$ 599 – US$ 1,099 (Prices vary based on watch band)
  • Apple Watch Edition: US$ 10,000 – US$ 17,000
Going back to the definition of determining the price of the product, it appears that Apple thought that they could earn reasonable profit with the above price range.

The only question is, are the consumers willing to shell out US$ 349 to US$ 17,000 for an Apple wearable and at the same time happy about it? If consumers decide that the price set by Apple is too high for their taste due to the presence of much more useful smartwatches in the market, the initial strategy may be detrimental to the survival of Apple Watch.

Product survival is arguably the most fundamental pricing determinant and comes into play when the conditions facing the organisation are proving to be extremely difficult. Thus prices are reduced often to levels far below cost simply to maintain a sufficient flow of cash for working capital.

Also, if Apple factory production capacity is under utilized to a large extent or unsold smartwatches have piled up due to intense competition, Apple is unable to sell its products. To keep the factory going and to convert the inventory to sales, an industrial firm should reduce prices.

There you have it – the prices for Apple’s first smartwatch. Preorders and in-store previews begin on April 10th and the watches will start shipping on April 24th.

0 comments

Post a Comment