Why Apple Products Are So Expensive | So Expensive

Why Apple Products Are So Expensive | So Expensive


In 2016, the iPhone 7 started at $649. Three years later, Apple’s flagship iPhone cost 54% more. It’s even more dramatic for the Mac Mini. When Apple released its new model, the price increased by 60%. These prices bring in
huge profits for Apple. As the US’s first trillion-dollar company, Apple’s market cap is higher
than the GDP of Switzerland. So what makes Apple products so expensive? Mohan Sawhney: Apple has, over the years, built a reputation for quality and the industrial design of its products. Narrator: That reputation has created millions of loyal customers. Marco Pierre White Jr.: I’ve
been here about 36 hours now. Man, I’m super excited,
I’m not even going to lie. Can’t wait to get my hands on mine. It’s only 1,000 pounds, man. Eh. I’m probably getting two, man! Sawhney: So that brand loyalty
translates into a premium that they’re able to
extract from customers who are unwilling to switch
out of the Apple ecosystem. Narrator: That premium is
also known as the “Apple tax,” or paying more simply because
it’s an Apple product. The 256 GB MacBook Air, for example, costs $1,299, but you can get a more
powerful Windows laptop for over $100 less. Apple’s high prices
reached meme proportions during the announcement of
its Mac Pro in June 2019. Claps turned to gasps
when John Ternus unveiled a $1,000 monitor stand as an add-on for the $5,000 Mac Pro display. John Ternus: And the Pro Stand: $999. And like the Mac Pro, they’ll
all be available in the fall. Narrator: In truth,
$6,000 for a professional reference monitor of this quality is comparable to the competition, but that didn’t matter. Apple had botched the messaging, and its $1,000 stand became infamous. Sawhney: Apple does something
else that’s a bit sneaky, which is that when
you’re buying the iPhone, you can’t add memory to it. So if you want more memory, you have to pay more Apple tax. Narrator: With Apple’s
computers, these upgrades get even more expensive. If you want a 13-inch MacBook Pro with 512 GB of storage, you have to pay $400
more than the base model. And Apple’s accessories
also have high premiums compared to non-Apple products. Like its $129 keyboard or its $79 mouse. Even Apple’s cables cost more. Apple has kept its proprietary
lightning connector while removing useful ports, like the headphone jack
and the SD card reader, forcing consumers to buy expensive dongles like its $39 SD-card-to-USB-C reader. But are these products worth the premium? Apple loves to talk about its innovation. Narrator: And iPhones
have added great features, like OLED displays, faster
processors, and thin bezels, but competing products have
many of the same features. Sawhney: The components
that go into making a smartphone are fairly standardized. For example, Sony competes with Apple in smartphones, but all of the camera sensors
that go into an iPhone are made by Sony. Narrator: And those
components cost a lot less than a new iPhone. Sawhney: The bill of
materials is about $490 for a phone that is priced at $1,099. As a comparison point, the Galaxy S10 Plus is about $420 below materials for a price of $999. Narrator: Something changed when Apple released the iPhone 10. Not only was it more
expensive, but the difference between the bill of
materials and the retail cost was much greater. Obviously, Apple wants to make a profit, so the bill of materials has
to cost less than the device. What makes Apple special is its ability to pull larger profits
than its competitors. Instead of a technology company, think of Apple as a luxury brand. As with Gucci or Hermès,
customers pay more because the logo is a status symbol. That handbag isn’t a more functional bag, but customers still value it more. Sawhney: So, all our
products become an extension of our personality. “I value
elegance, I value design, I value simplicity, I
value, ‘It just works.'” And that is what inspires a lot of loyalty and allows Apple to extract
a premium for their products. Why are Apple products so expensive? ‘Cause the design’s very sleek. I think because they make premium hardware and people are willing to pay for a simple, seamless experience. They’re catering to
people that really love ease of use and user-friendliness, and I think that probably that layer of design
probably costs a little bit, and I’m happy to pay for it. They are expensive because they know we will buy all of their things no matter how expensive it is. Samsung, Android, Apple, thank you. Sawhney: I think that customer
loyalty is hard to earn, but when you do earn the customer loyalty, love is blind. Narrator: But this strategy
might not work forever. Competition with
less-expensive Android phones has gotten steeper, and that’s put the iPhone’s
market share at risk. Sawhney: Apple’s performance
in India is pathetic. Pathetic to the point
that their market share has now slipped to less than 2%, has become completely irrelevant, and the primary reason there
is that the price points are simply unaffordable
for the Indian market. Narrator: If Apple
can’t sell more iPhones, it might have to sell fewer
iPhones for more money. Charging a premium allows Apple to keep increasing its revenue, even if its biggest category, the iPhone, is declining. Sawhney: See, whenever
you create a new product, what you want to do is
to extract all of the premium that you can from
the higher-end customers, people who are willing to pay a premium. Narrator: That means the
customers who buy the iPad Pro or the $5,000 iMac Pro. Apple does offer cheaper models, like the iPhone 11 or the 11-inch iPad, but those aren’t always the
models customers choose. Sawhney: This is called
extremeness aversion, because you don’t want
to buy the cheapest, you don’t want to buy the most expensive, so the middle one looks like a compromise. Narrator: But Mohan pointed out that Apple has a disadvantage compared
to true luxury brands. Sawhney: A luxury product
is like a Rolex, right, that you’d keep it for a lifetime. Well, you can’t keep a
smartphone for a lifetime. So, premium. Perhaps not luxury. Narrator: For now, Apple’s
reputation remains strong. And the customers who don’t want to spend $1,000 on a new phone? Apple has a plan for that. Keep the old models around, just at a very slight discount. But if Apple wants to
keep its loyal customers, its innovation will have to
keep pace with its premiums.

100 thoughts on “Why Apple Products Are So Expensive | So Expensive

  1. Hate apple. Sorry I'm all Samsung.. Tried the iPhone 10 and it's crap! Doesn't do half of what my Samsung 5 did!! Pictures aren't as great either!

  2. This is a stupid video. Apple costs more, but you get a hell of a lot more for your money. Windows and Android suck! Even Windows programmers use MacBook Pros. That should tell you something. The top of the line PC laptop, Android phone from 5 years ago is pretty much landfill, whereas the equivalent MacBook Pro and iPhone from that era is still worth a bit of change.

  3. I dunno, I just switched from Android to iOS after 8 years with Android and I think the experience is slightly better. I don't think about using an iPhone or iPad, but I did think about the mechanics of Android more and more. I switched because I liked the ease of use in iOS smartphones and tablets. It just feels more premium to me. I also recently bought an Apple iPhone 8 for $450 because I couldn't justify spending more than that for a smartphone.

  4. This is bad, inch-deep, lazy journalism and an embarrassment. There are good arguments for and against Apple. But you won’t find them here.

  5. Then why do I see broke university students that can barely afford their own rent and battle student loans yet own an IPhone 11? This is actually so sad, because they clearly want to look good to the society.

  6. mobile – iOS
    pc – Windows
    To be honest…. I'll stay with apple because the competition is meh… I really tested them and not a single device was smooth as an iPhone. But I'm pretty sure that the problem is not the hardware but the software.

  7. Apple products are expensive because they are greedy. Each new endeavor apple undertakes, be it the ipod or iphone, things that other companies worked the bugs out of before apple copied it and sexied them up a bit are prime opportunities for apple. These products have already shown their promise. Apple then puts on their "as a service" coat of paint and convinces people that their version of the products are "life changing and hip" people will pay good money to be part of a fad or group. Well… some people would. There are a few other reasons for apple prices. Primairly though, they want to be known as a premium brand, so they over charge and under perform much like intel cpus. Hopefully apple will be forced to drop their prices to remain relivant like Intel has had to.

  8. The only reason this shit is so expensive is because Apple have realised how stupid people actualy are, and people are stupid. That's a whole lot of ridiculous value and worth into plastics metal and glass. You make it shiney and slick, people will throw their lives away to get it. Look at the amount of way better examples out there, Apple fans are still stuck on a product that is now way down the ladder in specs alone. The brand is seared into minds like a steak is branded by the grills! The amount of worth the geeks mind will put on things, then add a little cool or chic and you've got a frenzy of absolute Zombies, doing whatever like puppets, the damned store looks like an evangelical Church! WIERD and SCAREY.

  9. Never had an apple product but I just got the latest galaxy note which was 1000 dollars but I got another for free so basically 500 dollars for each one had the s7 before getting this glad I did this phone just just freaking awesome no thanks apple I'll stick with Samsung way better price wouldn't say way better phone because I've never owned a iPhone, but samsung is freaking awesome

  10. By "ease of use" and "user friendliness" they mean utterly counter-intuitive UI and absolutely no customization options. Lol alright Apple.

  11. This is an incredibly low-effort explanation by Business Insider; you guys should know better. What phones were competing with the iPhone 7 line when it launched in 2016? Find out which was the premium offering by Samsung, OnePlus and all the others back them. Then compare how much they sell for today and you'll see that the iPhone 7 still sells for a higher price.

    Apple today is still supporting iPhone 6 with software upgrades, a phone that was released in 2014; can any other manufacturer say that today? What does someone who bought an iPhone 6 "at a premium price" in 2014 has to say to the Android user who did the same and have had to buy another phone just to keep up with the latest in software technology? Who is actually paying more…? It's incredible that whoever put this video together on a site that has "Business" in its name and claims to be an "insider" didn't look into this.

  12. 0:15 Be chutiye, that's iPhone 11 Pro, not iPhone 11, 11 cost's $699
    0:23 So did the CPU, Storage, Memory and compute performance.
    2:14 Really, what embedded system allows you to add memory to it. Keyword "memory". So the statement makes no sense, adding insult to injury, Apple SoC have been at least 2 generations ahead of competition for half a decade now.
    2:44 Hahahahaaha, that's USB-C not Lightning.
    3:01 These are the most powerful & advanced smartphones anyone has ever made.
    3:19 So pixel 2 and iPhone XS OLED screens are comparable? Nice joke you got there. Why don't you go do standup.
    3:30 Camera in Phones are all about software and Ai, and has very little to do with sensors.
    3:40 So you are crying for ~3% extra profit margin, which is used to manage and update 5 different operating systems, over the hardware and countless services. Seems Legit
    Ok I am getting bored picking this video apart. You are welcome to correct rest of video. You know that this has been hilarious, like looking at an old man comparing Y2K with PS4, and asking why PS4 is so expensive.

  13. This guy literally just compared the flagship iPhone 11 Pro to the iPhone 7 as if the regular iPhone 11 doesn’t have better features than the iPhone 7 Plus for less money. Compare apples to apples dumbass

  14. This is the most ignorant video I've ever seen. Yeah some people do buy apple products for the brand, but if it was that simple, the iPhone would've been a dead product from day 1. While iPhones cost more, they hold their value far better. You can buy one and trade it in the following year to get next year's iPhone for under half the price in some cases. That's unheard-of of with android devices. Also you mentioned the cost to build an iPhone vs Samsung, yet you ignore the most important part of the phone which is the software/UI. Samsung builds their UI off an open source OS, and doesn't support their devices for long. This is quite obviously FAR less expensive than building an OS from the ground-up that's optimized to work well on iPhones to the point that Apple can get better, more consistent performance out of weaker internals. This is on top of Apple's hardware costs being higher already. The RnD costs for that are far greater than any Android phone. Not to mention their industry leading customer service, and the quality of their apps and services.

    I really expected far better from a channel called business insider. This whole video is just plain ignorant

  15. The entry level iPhone 11 is 699, not 999. If you really want to get into the Apple ecosystem its not as crazy as the alarmist apple haters are saying. Also apple isn't at your house with a gun telling you yo buy their product.

    Apple still makes their older phones and an iPhone 8 will set you back 449, and the A11 out performs a snapdragon 845.

    Apple isn't the cheapest in town. But you do get a product that is supported longer, and works fine. Personally I think Android makes the most interesting products, Apple looks a bit stale and boring, but for work I need my tech to work, and my apple products just last better.

    But if you like changing your tech every year, Apple products don't make sense.

    Still the pricing even within Apple is odd. The Airpods are the same price as an iPod touch. The keyboard for iPad is half the price of an entry level iPad. Not everything apple makes is expensive.

  16. I'm a loyal Android user, but since I develop mobile games and you can monetize a lot more on iOS than Android, I had no option but to use apple products. But still, personally, I think Android is better than iPhone.

  17. My opinion:
    Apple will always product good products, cause of the high price they sell it.
    Over windows or android, will always be in the middle:
    If you take a low cost phone is going to be better
    If you take a normal cost phone is going to be a bit better
    If you take an actually good phone, is going to be worse.
    Ex: a normal laptop<Mac<gaming laptop
    So it isn't very worth to buy an apple, cause for a similar price you get a better product or with some hundreds less a bit worse product
    Sorry fory bad english

  18. KEEP WHINING & MOANING PLONKER ❗❗❗❗❗❗❗❗👊👊👊👊👊👊👊👊💩💩💩💩💀⤵️🤪🤪🤪🤭😂😂😂🤧🤣🤣🤣🤣🤣🤣👻

  19. This video is just rehashing of the same old tired line of commentary. There are many idiotic statements in this video which are added to suggest BI somehow has some magical knowledge. They don’t. People make choices based on the value they get in a product. Period. If the value is not there to them personally, then they don’t buy it. Period. People will determine for themselves if a produce is not worth it … so we don’t need BI to “splane” to all us idiots out here in the real world.

  20. Kids at my school: "I have a iPhone 8 that cost 800 dollars."

    Me: "My gaming PC only cost 100 dollars more and it can do a lot more."

    Kids: "Stop bragging."

    Me: "I ain't I'm just pointing out how stupid you are to spend 800 on a phone."

  21. Apple can basically say… The max one has 10 more PPIs than the normal one… And people be like wow, they are soo Innovative

  22. "Why Apple Products Are So Expensive"
    Because the reason why every dumb product is so expensive… idiots willing to pay more for less.
    You don't pay more for a good product, you pay more because you are dumb and don't care about quality, value or ethics.

    Also, that $6k monitor is not "comparable to the competition" as those reference monitors from the competition offer A LOT more features like SDI and a lot of on-screen info that the apple one lacks.
    The Apple one is closer to the $3.5k 8K res Dell monitor.

  23. The reason I used apple is simply the software is outstanding, the simplicity of iOS is 100 percent better than android.

  24. You can't just look at how much each component cost, add it up, and say that that's what the phone's worth. There's marketing costs, development costs, production costs, labor costs, and so much more to consider when they come to the conclusion on what to price the phone at!

  25. I have an older 2013 mac book pro the last model with a disc drive and multiple usb ports. I updated the GPU, CPU, Graphics card, and even the Display to work just as fast as this years model of mac book. Also i’ve upgraded the battery.

  26. I can afford it, so I don’t care paying “Apple tax”. But one cannot buy status symbols and prestige, but Apple products can give you that.

  27. I've always said people that buy apple products are the biggest suckers. More money for a less capable device. I did tier 2 tech support for them during college, and gained a new found appreciation for my Linux/windows pc and android phones.

  28. yes iphone is expensive;
    -for its build quality
    -chip
    -durability
    -camera
    many indian people cannot afford iphone so you are saying its expensive..funny

  29. Remember, everyone wants to see David crush Goliath and when he does, people often celebrate. Apple has been preying on feeble minded people for long enough. Infact, there are plenty of companies that have been riding the feeble minded consumer pony for far too long.

  30. the last thing he said is some TEA because given that apple hasn’t done anything new in years i’m definitely switching for the next phone i get

  31. Because their target market is the cheap social climbers of the society who are willing to spend by using credit card

  32. I can easily afford to upgrade but I'm baulking at the price. The top spec iPhone 11 is nearly $2500 in Australia. It's getting crazy. Sales are slipping in Australia because they keep jacking the prices up and people are going elsewhere.

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