Ever wondered why Apple products always cost so much more than the competition? Here are some reasons why.
Apple’s products typically cost much more than those of its competitors. While at first, it seems Apple is taking advantage of its brand name, there’s much more to its pricing than meets the eye. Factors like Apple’s exclusive ecosystem, privacy policy, marketing costs, and high resale value also contribute to a product’s high price.
In this list, we’ll look at several factors that explain why Apple products are so expensive.
1. Apple’s Ecosystem
In tech, an ecosystem loosely refers to a set of individual devices that complement each other to form a bigger, more useful unit. Take the iPhone and MacBook, for example. While both are individual devices, if used together, they increase each other’s usability and improve the overall experience.
Apple’s ecosystem is different from other companies because Apple devices typically only connect with other Apple devices, and work really well while doing so. Tech YouTuber MKBHD brilliantly explains it,
The more a user dives into the ecosystem (by adding more and more Apple products to the deck), the more rewarding it becomes. This, and the system’s exclusivity (as explained by MKBHD) contribute largely to the premium prices for Apple’s products because users are willing to pay more for an improved experience and to get gadgets that work with what they already own.
2. High Quality and Long Life
Apple products typically outlive their competitors because of their high-quality hardware and software. The hardware is carefully designed, manufactured, and assembled using materials like aluminum. Add the software (operating systems and other native applications) is optimized to fully take advantage of that hardware because Apple doesn’t need to design for any other devices.
As a result, the end product doesn’t only feel and look good but is also durable and high-performing. Together, Apple’s hardware and software provide users with a highly-tailored, high-quality user experience, compelling them to pay more.
3. Innovation
Apple’s technological innovation is another reason why its products cost more. The recent advent of the M1 CPU chips is a good example.
By replacing Intel’s CPU with Apple’s own ARM-based silicon, not only did Apple get better performance out of its Macs and iPads, but it also revolutionized the CPU industry. And Apple has been doing this for a long time; the iPod is a classic example. This behavior has placed Apple as a thought leader in Silicon Valley.
To keep leading the tech industry, Apple has to invest heavily in research and development of new technology. According to Statista, its R&D budget has recently been as much as $20 billion.
4. Privacy
Apple also charges so much because it doesn’t sell user data to profit, like many other companies, and it also doesn’t come preloaded with user-tracking software. Instead of selling user data, Apple charges users more. With growing awareness of advertisers tracking users, Apple is cashing in on the fact that privacy is priceless.
Sign saying privacy, please
This doesn’t mean that Apple doesn’t track you at all, however. It does so to improve its own services and products—which kind of makes sense. Without feedback, the company cannot tailor products to suit its users so well.
5. Free Operating Systems, Applications, and Updates
Apple’s operating systems get one major upgrade a year and dozens of smaller point updates throughout the year. Compare this to Windows releases, which come after every few years and often require payment. Though Microsoft has made the upgrade from older Windows versions to Windows 11 free, you still have tons of in-app purchases that cost a lot, like the Office Suite.
With Windows laptops, you have to buy the Office Suite to get the workspace tools, and their new versions aren’t free either—you have to buy them too. Whereas, with macOS, you get Pages, Numbers, and Keynote for free and get free updates for them as well.
The company has to invest heavily to keep this software—and more—free. By charging more from the customer, Apple generates this investment.
6. Marketing and Support Costs
Apple Store Logo
Product cost is roughly the combination of direct material costs, direct labor costs, and manufacturing overhead costs.
Here, as you can see, there’s no mention of marketing costs and post-purchase service costs, for example, which a company has to spend to sell its products and retain customers. The same goes for Apple: as well as production costs, the company spends a lot on marketing and support.
All the Apple Stores, for example, are a way of marketing Apple products, and they cost a lot. They have an iconic infrastructure; they are full of experts, and they provide an excellent way to interact with the products. And there is Apple Support too, where you can contact technical service agents to troubleshoot problems with your devices and ask the questions you want to.
What’s more, Apple is known for releasing some of the most impressive and groundbreaking commercials we’ve ever seen. All of this—and countless other factors—are costs other than the product cost that explain why Apple charges so much. To simply say that it costs Apple $400 to produce an iPhone and the remaining $600 is profit would be misleading.
7. Branding
By introducing products across many categories like watches, phones, computers, earphones, notepads, and even coronavirus masks, Apple has become more of a lifestyle brand. Add this to the intricate details, premium feel, and perceived value of Apple’s products. It’s a luxury lifestyle brand—where owning its products is a symbol of status and a luxury lifestyle.
Apple iPhone, AirPods, and Watch as Luxury items
The Indian YouTuber Technical Guruji points out that iPhone pouches have cutouts to show the Apple logo. This shows how important the brand is in its symbolism.
Users who are in this lifestyle want to retain it and are happy to pay the price. Those who are not, want this lifestyle are also ready to pay for what Apple demands.
8. Resale Value
Both the Samsung Galaxy S9 and iPhone X were released in 2018 and were priced at $700 and $1,000 respectively. Today, a used Galaxy S9 costs between $50 and $150 (14% value retained) while a used iPhone X still costs between $150 and $400 (27% value retained).
Apple products retain so much of their value for all the reasons mentioned in this article. And since they retain their value and sell for more later, they cost more to purchase the first time, too.
9. Customer Loyalty
No matter what reason you put forward, one that never makes Apple rethink its pricing is its loyal fanbase, who are always ready to pay the premium price. There has been a ridiculous increase in Apple’s prices and revenues over the past couple of years, but its product sales and popularity have grown too.
People in Apple Store
Though all the reasons above contribute to creating this zealous fanbase, perhaps lifestyle branding stands at the top.
Are Apple Products Still Worth It?
These are the reasons why Apple products tend to cost more than other products. The prices may not always be justifiable (like in the case of the $1,000 Apple Pro Stand), but what matters is the products still sell a lot.
However, this doesn’t mean that you have to spend too much to acquire them. For example, you can save money while buying an iPhone by not buying the latest model and by going for a refurbished one. Though the product will not be all-new, the experience will be intact.
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