Pricing puzzle for you.
Apple introduced 13-inch MacBook Pro with Retina Display last week. They introduced not just one but two at two different price points.
The only difference between the two editions (other than price of course) is the flash storage size, 128GB and 256GB. (On the related note see here for why your product versions should differ in price dimension.)
Did they really need the 256GB version at $1,999 price point? After all the 128GB version is configurable. One can select 128GB version and configure it as 256GB for additional $300.
Questions (10 points each)
- Why is there a second SKU (version)? (Hint: See here)
- Why did they choose not to make this second SKU have different CPU? You can configure the 13-inch MacBook Pro with 2.9GHz CPU for additional $200. Why didn’t they make the CPU non-configurable and made the second SKU at $1,899 with 2.9GHz CPU? (Hint: See here)
- How can a feature (flash storage size) be such an effective meter for value capture? (No hint here, ask me how I can help you find what your customers value and how you can capture your share of it.)
When Apple announced MacBook Pro Retina Display at $2199 price point, I wrote this in GigaOm
This clever price discrimination will result in two positive effects on the units sold. One, some who would have settled for a MacBook Air or the 13-inch MacBook Pro will upgrade to the $2,199 MacBook Pro. Two, it will push some who preferred the 15-inch MacBook Pro to the $2,199 version with Retina Display. The net result is a higher ASP than the current $1,245 number. Even if one in ten customers of first category and one in five in the second category upgrade to Retina Display, Apple will see the MacBook ASP (Average Selling Price) go up to $1,363.
Apple announced its Q4 numbers yesterday. Despite its hits and misses with iPhone and iPad there is one bright spot – its portables (MacBook line) did very well. MacBook volume came in at 3.95 million, up 10% YoY and revenue from MacBook revenue came in at $5.363 billion, up 16.9% YoY.
I predicted Apple’s ASP could go up to $1,363. If you the math with the revenue and volume numbers you will find that the ASP came in at $1,356. That is within margin of error.
The net result of increased volume and higher ASP is $297 million in additional revenue which is mostly profit because of incrementally higher margins on higher priced units, meaning Apple is also on track to add $1 billion in profit (full year) as I predicted.
That is one magical product indeed.