Apple's Premium Pricing Strategy

Demand curve

Illustrates the number of units the market will buy at different prices, showing an inverse relationship between demand and price.

Avid Fans

Dedicated and enthusiastic customers who are deeply committed to a particular brand or product.

Profits

The financial gain realized when the revenue from a business activity exceeds the expenses, costs, and taxes.

Value-Based Pricing

Uses the buyers' perceptions of value rather than the seller's cost. It is customer driven and set to match perceived value.

Fast-Changing Environment

Refers to the dynamic and rapidly evolving conditions and factors that impact businesses and markets.

Cost-Based Pricing

Sets prices based on the costs for producing, distributing, and selling the product plus a fair rate of return for effort and risk.

Break-even pricing

Setting price to break even on costs or achieve a target return, illustrated by a break-even chart.

Competition-based pricing

Setting prices based on competitors' strategies, costs, prices, and market offerings.

Oligopolistic competition

A market structure with a few large firms dominating the market, leading to mutual interdependence in pricing.

Pure monopoly

A market structure with a single seller dominating the market, giving the seller full control over price.

Pure competition

A market structure with many buyers and sellers trading identical products, leading to no single buyer or seller influencing price.

Monopolistic competition

A market structure with many firms selling differentiated products, allowing for some control over price.

Price elasticity

A measure of the responsiveness of quantity demanded to a change in price.

Customer-Driven Pricing

A pricing strategy that focuses on aligning prices with the perceived value by the customers.

Product-Driven Pricing

A pricing strategy that is based on the costs and production of the product, rather than the perceived value by the customers.

Iconic Brand

A widely recognized and established brand that is highly esteemed and valued by consumers.

Cost-plus pricing

Adds a standard markup to the product cost, ensuring seller cost certainty and minimized price competition.

Value-Added Pricing

Attaches value-added features and services to differentiate a company's offers and thus their higher prices.

Target costing

Begins with an ideal selling price based on consumer value, then targets costs to meet the price.

Variable Costs

Costs that vary directly with the level of production, such as raw materials and packaging.

Brands

Distinctive products or services that are differentiated from others and recognized by a particular name or symbol.

Social concerns

External factors related to societal issues that can influence pricing decisions.

Economic conditions

External factors such as inflation, unemployment, and economic growth that influence pricing decisions.

Stiffer Global Competition

Increased and more intense competition from global rivals, often resulting in pricing pressures and challenges.

Everyday Low Pricing (EDLP)

Involves charging a constant everyday low price with few or no temporary price discounts.

High-Low Pricing

Involves charging higher prices on an everyday basis but running frequent promotions to lower prices temporarily on selected items.

Price elasticity of demand

Measures the sensitivity of demand to price changes, with inelastic demand hardly changing and elastic demand changing greatly with price.

Price competition

Occurs when companies compete on price to attract customers, potentially leading to lower profit margins.

Good-Value Pricing

Offers the right combination of quality and good service at a fair price.

Pricing

The amount of money charged for a product or service, or the sum of all the values that customers exchange for the benefits of having or using the product or service.

Competitor Strategies

The approaches and tactics employed by competitors in the market to gain an advantage or edge over others.

Fixed Costs

The costs that do not vary with production or sales level, such as rent, heat, interest, and executive salaries.

Customer Value

The perceived benefits, both monetary and non-monetary, that customers receive from a product or service.

Break-even volume

The quantity at which total revenue equals total costs, aiding in determining the target return price.

Reseller's response to price

The reaction of intermediaries to changes in price, affecting the final price paid by consumers.

Total Costs

The sum of the fixed and variable costs for any given level of production.

Revenue

The total income generated from sales of a given product or service, calculated as the price multiplied by the quantity sold.