Analyzing the $999 Apple Monitor Stand
I confess. I don’t watch the Apple announcements. However, one of my readers and frequent commenters, Jim Schibler, sent me this video. When they announce the new stand for $999 in the video you can hear the audience laugh. Since then, many “Choose Wisely” memes have hit the Internet. People are making fun of Apple.
Let’s analyze this. First, people are allowed to make fun of companies. What happened here is this is so far out of the norm that it shocked people. Buyers typically have a reference price. If I ask you the price of a BMW, you have a price in mind. If I ask you the price of a computer stand, you have a price in mind… and that price is nowhere near $999. Laughter often comes from surprise, and that price was surprising. Even after the shock, that price seems extremely high for a monitor stand.
From Apple’s perspective, is this a mistake? I don’t think so. Let’s do the math (with some rough assumptions). A quick scan on Amazon shows you can buy a decent VESA adapted monitor stand for $25. Let’s assume then that Apple’s cost is $25. Apple could probably sell one with every monitor if they only charged say $50. That’s a contribution margin of $25 per unit. However, for every one they sell at $1,000, they make a contribution margin of $975. If more than 1 out of 39 monitor buyers also buy the Apple monitor stand, Apple makes more profit. There is no doubt that my assumptions are wrong, but the math is right. Apple is fine losing some percentage of the sales because their margin on the sales they make is so high.
There are other considerations as well.
- Having a high price keeps its brand image high.
- They aren’t really in the metal bending business so this is just incremental revenue and profit to them.
- This isn’t an important part of the Apple ecosystem so it doesn’t really matter if someone goes outside their offerings (unlike iPhone, computer, watch, earbuds, ???).
They are definitely being laughed at, but you could laugh at me too if I could make just a portion of what Apple will make selling metal stands.
What do you think?
Manager, Commercial Policy and Pricing at Clarivate
5 年Customers will pay for exclusivity and prestige. It’s finding those customers that is the issue. That’s is where the cost may lie.
Monetization| Commercial and Pricing Strategy| Product Management| Global Executive| Power BI enthusiast| AI Solution seeker
5 年A good alternative perspective. Value in the customer's eyes need not be just tied to utility for the product itself when sales volume is not the goal for the design.?
CRO | AI Business Applications Strategist | 4x Founder | Women Defining AI SF Bay Area Community Lead | ESG Evangelist | Author | Speaker
5 年People are freaking out about it, but they shouldn't be — it's more a mistake of messaging on Apple's part and a missed opportunity to frame the computer screen as $1,000 off for professional users that already own a stand.?"The truth is a lot of people doing professional video editing and things like that are using these displays that are mounted in place, and they have stands already," the popular tech vlogger Marques "MKBHD" Brownlee said in his latest video. "When they upgrade displays, they take them out and put them in the same place, and they don't need to buy new mounts and new stands for them."?It's a smart point, and it's one that's being lost in the outrage over Apple charging $1,000 for this monitor stand. He continued: "You and me, and most people watching WWDC, and most normal people just think of a monitor and a stand together. So what [Apple] should have said was this is a $6,000 monitor, but if you want to buy it without the stand it's $1,000 off — $5,000." In other words, instead of presenting the screen's stand as an add-on, Apple should have presented it with the full package price and an optional $1,000 discount for the professional video editors and developers watching that already own a compatible stand. This isn't a measure of Apple overcharging for something — it's a measure of Apple selling a niche product with a niche customer and their niche budget in mind, and then failing to stick the landing during the announcement. Admittedly, Apple isn't known for creating a lot of niche products. But the Mac Pro line is an exception; it's a device made with a specific type of professional in mind, one who's in an industry where a $6,000 reference monitor is thousands cheaper — and in some cases, tens of thousands cheaper — than the competition.? Gilbert Jun. 5, 2019, 4:53 PM We can laugh all we want; what Apple really did is a game changer, saving professionals who use this line of product THOUSANDS of dollars.?
I agree they can charge whatever they believe the market will bear, but at some point it is just gouging your most loyal customers.
Senior Analytics Professional.
5 年Largely agree except perhaps one note. I would add that there is a rare yet serious potential loss of credibility on pricing for Apple. Apple is perpetually being challenged by their skeptics for charging more bucks for less bang than the competition; the Apple customer base usually swipes these challenges aside... this particular incident provides a stark example that will no longer leave the conversation for consumers and adds legitimacy to the competitor claims. In this example Apple and Non-Apple users alike can all agree, regardless of the margin despite reduced sales, this price doesn’t compute with the value. Which begs the question in the eyes of only those who didn’t already believe so, where else might this be true for Apple’s pricing? At the end of the day a price is just a conversation and sometimes we should bite our tongue.?