How Important Is Product Pricing, Really?

Feb 17, 2012
15

Whenever I review a software product or gadget, one of the key elements I must consider is price. Time and again, I need to determine if the value a product delivers is enough to justify its price tag. And in far too many cases, it doesn’t.

But I’m starting to wonder how much price really matters. Surely we’d all like to save a few extra bucks whenever we can, but if the right product comes along that satisfies many of our desires, we find a way to justify purchasing it in our mind. The device over there that’s $200 cheaper is nice and all, but it’s not the one we want. And that’s all that matters.

[Image credit: Scott Dierdorf]

Nowhere is that more evident than in the mobile market. When it comes to mobile phones, there are a slew of devices available for free. In many cases, that means buying a feature phone, but for those that need data, coming across a free or extremely cheap smartphone is far easier now than ever.

And yet, it’s Apple’s iPhone, which saw unit sales soar to more than 37 million last quarter, that steals the show. Granted, Apple is offering the old iPhone 3GS for free and the iPhone 4 is available for just $100, but according to most analysts, the vast majority of smartphones it sold were iPhone 4Ss, which retail for $199 and up with a two-year contract.

If it was really the iPhone that everyone was after last quarter, why did they buy the most expensive version? If all they really wanted was the iPhone experience, wouldn’t have buying the cheaper alternatives been a better idea?

A similar scenario plays out in the tablet space.

[aquote]If pricing was that important, why did Apple sell 15m tablets that cost $500 or more?[/aquote]

For months now, I’ve been hearing that the Kindle Fire is popular because of its cheap price. And its estimated 5 million to 6 million fourth-quarter unit sales have been used to prove that point. But if pricing was really that important to customers, why did Apple sell 15 million tablets that cost $500 or more?

Similar scenarios play out in other markets, too. Samsung, for example, sells exceedingly expensive HDTVs, and yet, it’s one of the leading television makers in the world. Bose sells ridiculously expensive audio equipment, but people flock to buy its products.

Pricing really doesn’t matter. Today’s technology consumer wants the very best product in every category, and they’re willing to save up for a few extra months to get it. To them, it’s an unnecessary sacrifice to buy the cheap, underpowered alternative when they can keep up with their friends and coworkers and get something better.

Will those same folks find a deal when they can? Sure. And whenever they have the chance to buy a product on Amazon rather than in Best Buy stores, they’ll take it. But don’t expect them to be running over to the cheap Dell PC over there. Today’s consumer wants the MacBook Pro -- exorbitant price tag and all.


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