Friday, January 16, 2004

Smart Pricing

Apple prices so well. iLife 04, a bundle that includes a new iPhoto, iDVD, iMovie, iTunes, and GarageBand costs $50. I don't use iDVD or iMovie, and I'm quite happy with my current iTunes, but I would like a better iPhoto and GarageBand might be neat also. So it's worth $50 to me.

Somewhere out there we have a movie buff who is excited about iDVD and iMovie, but does not care for any of music stuff Apple does. iLife is worth $50 to him too.

By putting all of these products together Apple raises the overall willingness to pay for the bundle (and makes demand more elastic). This means that overall, people are willing to pay more for the bundle than they would for the pieces, but it's easy to price people out by having the bundle as a whole be too expensive. At $50, I'm not sure how much of a problem that is for iLife. But it's a real problem for $400 MSFT Office.


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