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Comment by orev | Hacker News Reader

Apple has long been the subject of criticism for its pricing. Usually by tech people who think that the cost of components is what drives the final price of a product. This is wrong.

There is a SINGLE driver of price for a is product: how much people will pay for it. That’s it. If people are willing to pay the price of a product, then that is the fair price of it. Simple as that.

You can get into some game theory about the sweet spot of lower price vs volume vs profit, but Apple seems to be doing pretty well in that area already.

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Very true. This is one reason I’ve stopped paying for it and I know a lot of people who have walked away from their products in the last few years. They’re too expensive and we have higher priority things we need to spend money on.

Also we’ve reached a plateau of innovation. Things were just about right circa 2011/2012. Everything else since has been quality, privacy or usability regressions disguised as innovation.

I buy stuff now because it needs replacing due to being worn out not because it gives me an advantage.

This is how I feel as well. I loved my 2012 MBP but it’s about time for an update. However, I don’t like any of the new laptops. I don’t understand why they had to screw with the keyboard so much. It is the worst thing that I have ever tried to type on. If they just upgraded the internals of the 2012 MBP but left the ports/aesthetics the same, I would buy it.

Conversely I love the new keyboards. It's fascinating how different people's experience is. May I ask you to describe your feeling? As a guess, does it feel ambiguous or inaccurate how short the keys are?

I suppose I am just used to a deeper keypress. I tried typing on one for about 10-15 minutes in the store and I just kept mistyping almost every third word. It's difficult to describe. I guess my fingers are used to needing to move further to successfully press the keys so they just overcompensate for the smaller range of motion.

Perhaps I could get used to it after awhile but I would rather not have to relearn how to use a keyboard when it is so different from the ones I use for my desktop and work machine.

> There is a SINGLE driver of price for a is product: how much people will pay for it.

Yeah no. Actually there are two main drivers, the one you mention (called “demand”) and the one you’re leaving out (called “supply”).

The concepts of supply and demand aren’t even a little novel or unheard of.

So it’s the interaction of people’s willingness to pay with the availability of other options or close substitutes, and the desire of firms to supply those items at a given price level.

>Yeah no. Actually there are two main drivers, the one you mention (called “demand”) and the one you’re leaving out (called “supply”)

Yeah, no. What the parent said covers both demand and supply. Price is exactly what people are willing to pay given both demand and supply.

> Price is exactly what people are willing to pay given both demand and supply.

In a theoretical competitive market. Not so much when some companies have exclusive access to parts of the supply chain, thanks to years of vertical integration and supplier financing.

This is not correct. If the willingness to pay does not correspond to a willingness to sell there is no transaction.

The actual selling price and quantity sold is determined by the interaction between supply and demand.

This concept is first day, first hour, of any discussion of economics.

>This is not correct. If the willingness to pay does not correspond to a willingness to sell there is no transaction.

We're talking about prices as verified by millions of transactions (Apple's unit sales), so that's already solved.

E.g. the actual prices they managed to sell things, not just some sticker price for unsold products.

Supply/demand is part of the calculation a consumer uses to determine what price they want to pay, and the final result of that calculation is the actual price they are willing to pay.

Incorrect. Only demand is determined by the consumers. Supply is determined by the willingness of those with resources to supply those resources at a given price.

You are straw-manning the original argument. GP said nothing about consumers controlling supply, just that it is part of the calculation that is used when a consumer determines a price they are willing to pay.

If you’re going to try and be a pedant, at least base your reply on the actual argument you’re responding to.

On the other hand: I can't go in and replace the SSD anymore on these devices, and it's highway damned robbery to charge me 200% markup [edit: it's actually just about 400% markup] on an SSD without any actual value add. It's not that people will happily pay for it; it's that they can get away with extorting it out of us because we are bought into the larger product and it won't work as well without these too-expensive upsells.

That’s the exact example I made of comparing to component costs. The individual cost doesn’t matter from a pricing standpoint. It only matters if it’s so expensive that you no longer buy it. If the whole ecosystem provides enough value for you to stay in it, then they have done their job of creating value that is worrh paying for.

But in the specific case of an SSD, it's very easy for the user to go see what it costs. I have no idea what the screens cost, or what the custom milled aluminum case costs. I'm ignorant enough about that part that they can charge me whatever they want. What I'm saying is that they're really pushing it with blatant pointless price inflation on basic stock part upgrades. This is in fact pushing me closer to not buying their devices (though they haven't pissed me off with this quite enough yet, because it's an infrequent purchase)

>There is a SINGLE driver of price for a is product: how much people will pay for it. That’s it.

It's worth noting this is a neoclassical view (if we take it to mean supply and demand solely determines the price of a product) but there are other views too (Sraffian, Ricardian and Marxian, for instance, though these are more oriented on value than price). I don't think the quick answer to the question offers enough explanatory power as to why many (most?) people in the market would pay that much for it.

Also the fact that only Apple makes Apple products, as opposed to other Windows/Android computers/laptops/Phones/tablets which have multiple competitors.

I’m not trying to answer the question of “why”, just making the point that this is how things are, because much criticism leveled at Apple (and any other tech perceived as overpriced) is based on invalid assumptions of how a fair price is determined. I’ll leave it to the Economists to come up with theories on why.

I'm not sure if we should let the market have a monopoly on deciding what counts as a fair price - there are plenty of instances, though perhaps Apple isn't one, in which goods are so clearly overpriced to the detriment of consumers. Food and water in some areas, for instance. My point is that to say something is fair or unfair means that a judgement is being made, and deferring that judgement to "that's just the way it is, therefore it's fair" isn't to say you're avoid making a statement on fairness, it's to say "my view is that fairness is decided by the market price".

I admit my choice of the word “fair” isn’t ideal. I was trying to think of another way to put it. Probably “natural” is a better term.

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