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iPhone Not Expensive Enough?

by Terrence O'Brien on June 18, 2007 at 11:17 AM

iPhone Not Expensive Enough
We never really thought we'd hear anyone say that Apple wasn't gouging its customers enough, but that appears to be the opinion of Rafi Mohammed, head of the consulting firm Culture of Profit, and author of 'The Art of Pricing.' Tom Taulli, over at Blogging Stocks had a chance to interview Mohammed who says, "Apple did a great job of setting prices. It kept the four-gigabyte model under the psychological $500 threshold, which was smart. It probably could have charged a higher price for the eight-gigabyte model though."

Mohammed goes on to recommend that Apple hold off on discounting the phone despite the ridiculous profit margin on the device. "Even with reported gross margins of 50 percent, which makes it tempting to discount, I'd advise Apple to moderate its discounting and consider setting higher prices when it rolls out models with new features."

As much as we're psyched for the iPhone, one of our big complaints is the high price point. With the entry-level four-gig iPhone running a steep $499, it's hard to imagine Apple meeting its goal of 10 million iPhones sold in 2008, unless it cuts prices quickly and significantly. Sure, the iPhone is pretty, but when you can buy both a BlackJack and an 80-gigabyte iPod for less than the iPhone, it's hard to justify the expenditure.

From Blogging Stocks

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Tags: apple, iphone, pricing, profit

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