Price fixing by Apple?

Discussion in 'Buying Tips and Advice' started by mgguy, Mar 16, 2007.

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  1. mgguy macrumors 6502

    mgguy

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    Might Apple be engaged in price fixing? Everywhere I look the prices are almost identical, and there are never any markdowns except for refurbished goods. Why is it that other computers go on sale but Macs never do? Is this even legal (isn't there a law against price fixing)? How does Apple get suppliers to go along with this, by threatening not to supply them with products to sell? Don't get me wrong, I love Macs and won't switch because of the price, but really ...:mad: :mad: :mad:
     
  2. balamw Moderator

    balamw

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  3. Scarlet Fever macrumors 68040

    Scarlet Fever

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  4. macjay macrumors 6502

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    Apple is just setting prices and limits the discounting of its products. Price fixing would be if Apple got together with other computer makers in collusion to sidestep true competition.
     
  5. The Stig macrumors 6502a

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    #5
    The profit margin on apple products are REALLY low. Store don't have much mark up on them, if they didn't sell them for the same price apple did they wouldn't make any money. You wouldn't believe how little stores make on apple sales. On most iPods the store only makes about $10 per unit. This is not a lot when they might make $50 or more on another MP3 player.

    TS
     
  6. IJ Reilly macrumors P6

    IJ Reilly

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    #6
    Apple is one of many manufacturers requiring retailers to comply with a set "minimum advertised price" (MAP) for their products, which is only a few dollars below MSRP. Many retailers get around MAP by advertising "$1,299 before $300 instant savings," or some such. Apple must not allow this scheme either, which I suppose is why discount retailers such as Amazon use rebates to effectively lower the price of the Apple products they sell. Others Apple dealers advertise "we pay the sales tax," which is equivalent to offering a discount. BTW, just because a retailer advertises an item for a given price doesn't mean it's their lowest price. You can always ask.
     
  7. skubish macrumors 68030

    skubish

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    #7
    Please learn what price fixing means.

    Apple is setting the prices by contract with their authorized resellers.
    Perfectly legal in the US.
     
  8. mgguy thread starter macrumors 6502

    mgguy

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    #8
    From Wikipidia:

    "Price fixing is an agreement between business competitors to sell the same product or service at the same price. In general, it is an agreement intended to ultimately push the price of a product as high as possible, leading to profits for all the sellers. Price-fixing can also involve any agreement to fix, peg, discount or stabilize prices. The principal feature is any agreement on price, whether express or implied." ​

    Sounds like price fixing to me. Apple does have some agreement with the retailer to stabilize prices, no? But if Apple really isn't making that much of a profit on their products (yeah, right), I guess it can be defended. Does anyone have any idea what Apple's profit margin is on some of its more popular products? For example, how much do they make on a MBP?
     
  9. dejo Moderator

    dejo

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    #9
    That's a totally different entity than retailers.
     
  10. smokeyrabbit macrumors 6502

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    No, it is totally not price fixing. Price fixing, as it clearly explains above, involves competitiors. Distributors are not competitors. Price fixing would be Apple and Microsoft secretly agreeing to not sell the comparable iPod and Zune models for less than a certain price. It is very common for manufacturers that also sell their products at retail to have minimum retail agreements with resellers, as has been stated above also.
     
  11. synth3tik macrumors 68040

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    #11
    Apple is keeping the market even. This is not price fixing, it's price fairness.
     
  12. mgguy thread starter macrumors 6502

    mgguy

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    #12
    Clearly Apple's controlling the price of its products is not illegal or they wouldn't be able to continue doing it. But the ultimate effect is the same, that is to keep the price set within a very narrow range and not allow retailers to offer discounts if they are willing to make a smaller profit for whatever reason. Somehow this doesn't strike me as being "fair" to customers. Are there any other computer manufacturers that have this kind of command over the price of their products? I see plenty of Microsoft products on sale all the time. But again, Apple is on firm ground from a strickly legal standpoint.
     
  13. WildCowboy Administrator/Editor

    WildCowboy

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    Sony also uses minimum advertised prices in many instances.

    Here is a good article about the concept.
     
  14. SMM macrumors 65816

    SMM

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    #14
    That comment is ( words not included so I do not get banned ). Post a picture of your Mac. I doubt you really own one. Should Microsoft be classified as a class A sexual predator? They have been raping people for years.
     
  15. jemeinc macrumors 6502a

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    #15
    Anyone is free to charge whatever they want for their product- they're also free to require their authorized resellers to agree to an absolute minimum to which they can sell APPLES'S (that's key) product.. This is very common in every aspect of business- granted, once an industry goes down that path of giving everything away it's rare to see a company not be forced to follow, but it happens..

    Apple obviously follows the logic that lowering their prices only cheapens the value of their products.. It's an excellent philosophy tp run a business by- can be difficult to achieve, but pays off very nicely when it works..
     
  16. booksacool1 macrumors 6502

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    #16
    IMO it depends. Apple IS competing with many retail stores. E.g. third party chains which stock apple products compete with the Apple stores which often compete with Apple's online store.
    Apple not allowing any real 'discounts' means that the stores can't compete with each other by using their profit margins. This results in apple (and the stores) making a very tidy profit on apple products.

    The Wikipedia page on price fixing seems to agree with this.

    "Price fixing is an agreement between business competitors to sell the same product or service at the same price."

    I'm assuming that the Apple stores and the department store chains (and the other non-apple apple stores) are competing with each other, and they are selling the same product at the same price.

    "In general, it is an agreement intended to ultimately push the price of a product as high as possible, leading to profits for all the sellers."


    Well that's pretty much what's happening. There's no discounting for competition, meaning... the price is as high as possible.
     
  17. jsalzer macrumors 6502a

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    #17
    Snack Cakes

    Little Debbie has been involved in price fixing for years. And they must have half of the justice department on the payroll, because they blatantly put the price right on their packaging to prevent retailers from changing it!

    :)

    OK - that wasn't as much fun as I thought. Sometimes, in the case of Kraft at least, narrowing the allowed price range (or printing a specific price directly on your packaging) is actually meant to keep retailers from raising the price too high (which they might want to do to get people to buy another brand for which they get a higher markup). Kraft did it to stop stores from raising the price to encourage people to purchase their store-owned brands.

    If profit margins are as low as the folks above say they are, then who knows? Apple specifying the price range may, in fact, be helping to keep the prices down. Though Apple having their own retail outlets would probably help to keep everyone in line.
     
  18. smokeyrabbit macrumors 6502

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    #18
    As far as business goes, (not someone's personal feeling of how this should be) Apple online, Apple physical stores, and the various re-sellers are NOT competitors in this sense. Apple and Dell are competitors. See the difference? Apple is the manufacturer. They sell their products to the online and physical stores, who in turn, sell the products at retail. Apple the manufacturer does not lose a sale if you buy a Mac from a re-seller or at an Apple store. Apple loses a sale if you choose a Dell instead of a Mac.

    Price fixing would be if Apple, Dell, HP, etc. all got together and set their prices for similar machines higher than the market is bearing now.
     
  19. LethalWolfe macrumors G3

    LethalWolfe

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    #19
    Read the article WildCowboy linked to. It does a good job of explaining price fixing and minimum advertised pricing.

    Apple, Dell, Gateway, and Compaq/HP getting together and saying, "Hey, we should all agree to not sell a computer for less than $1000" is price fixing. Apple telling retailers, "Hey, this iPod sells for $399 period" is not.


    Lethal
     
  20. Keebler macrumors 68030

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    who says a business has to be fair? they're in business for one reason....um... to make money. how they decide to do it and whether or not customers accept it is up to us...the customers.

    from a channel perspective, Apple knows full well that resellers make their money on being apple certified repair shops and the fact that the apple world is full of third party add-ons - hard drives (both internal and external), ram, input devices, monitors etc..etc.. SO, while not having large margins with apple's products, resellers have other ways to make their money. i don't know for sure, but i imagine apple might have some sort of rebate program for the resellers where if they sell x amount of y, they receive a larger/smaller rebate.

    Having strict reseller margins also ensures x % of folks decide to go direct with Apple b/c there isn't a big discount dealing with a reseller. Now, this isn't exactly good for the resellers obviously, but for Apple, it's golden. Anytime you have a product sold directly, you immediately increase your profit margin on that product. Why pay someone else 5% or 10% when you don't have to?

    I think your post is very emotion driven which is completely fine, but some education on business models is needed.

    Cheers,
    keebler
     
  21. tdhurst macrumors 68040

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    #21
    Huh?

    Businesses can require their resellers to not charge below a certain price, it's done all the time.

    Damnit, don't use wikipedia as a direct, reliable source. It never has, nor will it ever be, absolutely correct. It's meant as a jumping off point.

    If Apple, Dell, HP and Alienware colluded to charge a certain price for EVERY computer sold, THAT would be price fixing. Apple's policy is clearly not.

    Don't want to pay the premium for a Mac? Understandable, but don't assume it's illegal for them to set a certain price.

    Please do a little more research on the topic next time.
     
  22. iW00t macrumors 68040

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    #22
    Of course Apple indulges in price fixing. What else do you think happens behind the scenes? Do you genuinely believe we get hardware updates because the costs they are paying to Intel et al saw a corresponding decrease?
     
  23. iW00t macrumors 68040

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    #23
    Funny, how you guys like to say "Oh, Macs use Intel processors and all the same innards as PeeCees nowadays, but they are still not PeeCees", and suddenly you turn around and band Apple with other PC manufacturers in your little example?

    Apple has a monopoly on Apple branded computers. Only Apple branded computers are sold by Apple. Hence Apple = the entire market or what have you when it comes to the OS X platform, and yes, they can be said to be "price fixing" for all we care.
     
  24. jessep28 macrumors 6502

    jessep28

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    #24
    Here's something from the Department of Justice Website:

    http://www.usdoj.gov/usao/eousa/foia_reading_room/usam/title7/ant00008.htm

    Read through the previous pages to understand more. It's all relevant to the discussion but I don't feel like dumping a bunch of text nor do I think you want to read it all:

     
  25. GFLPraxis macrumors 604

    GFLPraxis

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    #25
    An example of price fixing is if a group of hard drive manufacturers get together and decide to set a very high price on hard drives (regardless of how much it costs to produce them) universally, removing all competition and causing the manufacturing costs to be irrelevant.


    Apple drops prices on Macs routinely as new hardware comes out, and are in direct competition with other manufacturers which they have no agreements with to fix prices (Dell, Gateway, IBM, Lenovo, etc).
     
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