iPhone X – Premium Pricing

Apple introduced not just one, but two new models of the iPhone this fall: iPhone 8 and iPhone X (ten). Sure, companies often introduce multiple new products at the same time, but rarely do they introduce products that are so similar in scope and use. Why did Apple introduce two models at the same time? Easy – two different models are for two different market segments.

At a price of $999 (64 GB) and $1,149 (256 GB), the iPhone X is Apple’s first premium level iPhone model. And, since it has leading-edge features unavailable on any other smartphone, it seems to be targeting the early adopters and tech enthusiasts who are not price sensitive.

What does the iPhone X have?

  • 8 inch screen takes up the entire face of the device
  • OLED display for thinner, brighter, viewing
  • Face ID infrared facial scanning

The strategy seems to be working. After only a few days of pre-ordering iPhone X online, delivery times are easily two months away.

Are you planning on buying one?

Group Activities and Discussion Questions:

  1. Pricing is usually a complex topic. Discuss the six steps for pricing (determining objectives, estimating demand, determining cost/profit relationships, select price level, set list price, and make adjustments).
  2. Discuss the various pricing models in class: demand-oriented, cost-oriented, profit-oriented, and competition-oriented.
  3. Show iPhone X: https://www.apple.com/iphone-x/
  4. Show CBS Video: https://youtu.be/haj5nV6Muhw
  5. For iPhone X product, divide students into groups and have each group work on any/all of the six steps.
  6. When setting the price level, assign each team a different model to use (demand-oriented, cost- oriented, etc.).
  7. Debrief the exercise. Compare the various pricing models and discuss advantages/disadvantages of each.

Source:  New York Times, CBS, other news sources

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