Apple are such money grabbing suckers

Discussion in 'Apple Music, Apple Pay, iCloud, Apple Services' started by matt3526, Jul 1, 2015.

  1. matt3526 macrumors regular

    Joined:
    Mar 7, 2011
    #1
    Why is it that apply music is $9.99 in the US and £9.99 in the UK? Do exchange rates mean nothing to apple? It's bad enough that they do (nearly) this with Mac's etc, but to just replace the $ sign with a £ and keep the price the same just sucks! Come on apple, spend less time robbing your customers and more time fixing your ****!
     
  2. MICHAELSD, Jul 1, 2015
    Last edited: Jul 1, 2015

    MICHAELSD macrumors 68040

    MICHAELSD

    Joined:
    Jul 13, 2008
    Location:
    NJ
    #3
    It 100% has to do with the record labels' contracts. 9.99 has long been the standard in both USD and British pounds for streaming services. Some countries are only $2.99-$4.99 depending on label deals.
     
  3. T'hain Esh Kelch macrumors 601

    T'hain Esh Kelch

    Joined:
    Aug 5, 2001
    Location:
    Denmark
    #4
    VAT is also different between countries.
     
  4. Michael Goff macrumors G3

    Michael Goff

    Joined:
    Jul 5, 2012
    #5
    They had to make the labels happy. If they didn't play ball, the labels wouldn't have either.
     
  5. MentalFloss macrumors 6502a

    MentalFloss

    Joined:
    Mar 14, 2012
    #6
    If they were "such money grabbing suckers", it would be $14.99 in the US and £9.99 in the UK.

    It's called capitalism. You try to get the highest price that you can get out of people. The main job of marketing departments is to determine the highest possible price that they highest number of people are willing to pay - also called the "sweet spot". For the UK, that is apparently £9.99.

    Let me ask you this way around: If you were running a company, would you sell a service for £7.99 if you knew that you could sell it for £9.99 without really losing too many subscribers? Would you be willing to make less money just to be less of a "money grabbing sucker"? I'm not saying that "yes" is not a potential answer here (it's certainly an honorable answer), I am just saying that if you answer "yes", you would not survive long in the business world.
     
  6. iConnected macrumors 6502a

    iConnected

    Joined:
    Feb 17, 2011
    #7
    Not necessarily.

    Tell that to easyJet plc, Poundland Group PLC, Lidl or ALDI, for example.

    It's perfectly possible to create effective, successful business models with very different pricing strategies.

    Profit, growth, customer retention, market share and other measures of business success are far from reliant upon (and may instead be severely hampered by) "charging the highest price that you can get out of people".

    Back to business school for you ;)
     
  7. MentalFloss macrumors 6502a

    MentalFloss

    Joined:
    Mar 14, 2012
    #8
    Believe me, ALDI, Lidl and others are very much charging the highest price they can get out of people.

    Read my post again. You missed the part where I asked whether you would charge £7.99 or £9.99 if the number of subscribers does not change significantly. Would you? If you lose only 2% of your subscribers on the higher price, then you will charge the higher price, because your profit will be higher. That "sweet spot" concept is a critical consideration that every business has to make.

    ALDI or Lidl do exactly the same thing. If a box of chocolates sells for 1.99 and they know that they will not attract more customers by selling it for 1.79, then they sure as hell won't sell it for 1.79. They only have to underbid their competitors by a certain margin to hit their own "sweet spot". And if they know that they will not scare a lot of people away by charging 2.19, then believe me, they will charge 2.19. They are still going for the same sweet spot of attracting the maximum number of customers at the highest possible price. And that is exactly what Apple and other streaming services are doing. They believe they hit that sweet spot at £9.99 and that they will not attract a sufficiently high number of customers by dropping the price.

    If Apple or Spotify believed that they'd get 30% more subscribers by dropping the price by 10%, then they'd have done that already. But apparently, this pricing strategy is not an "effective, successful business model". You're not telling me to go back to business school, but you're telling that to the whole Apple marketing department, because you claim that they have made a mistake in their market research and that you know better than Phil Schiller and his team how the market will react to a price drop in streaming services. That's a rather high level of confidence, considering that Apple is one of the most profitable companies on the planet thanks to Mr. Schiller.
     
  8. bucksaddle macrumors 6502

    Joined:
    Dec 4, 2008
    Location:
    UK
    #9
    Funny, people were saying exactly the same thing over on the Spotify forums. Is that Apples fault as well?
     
  9. iConnected macrumors 6502a

    iConnected

    Joined:
    Feb 17, 2011
    #10
    You're mistaken - I said no such thing.
     
  10. iConnected, Jul 5, 2015
    Last edited: Jul 5, 2015

    iConnected macrumors 6502a

    iConnected

    Joined:
    Feb 17, 2011
    #11
    You missed my point. Your characterisation of the relationship between capitalism and price was both over-simplistic and potentially inaccurate for any given product, service or business.

    Consider, for example, tins of baked beans instead of boxes of chocolates. UK supermarkets commonly sell selected products - like baked beans - as loss leaders. These are sold at very low and potentially even unprofitable prices. Their aim is to attract customers who will also buy higher priced items, generating an overall profit.

    Conversely, luxury brands may price items at a substantial premium to the market. Their aim (in keeping with their brand positioning) may be to attract only a very few customers - even though they easily could sell the same product for a much lower price to many more people.

    At even the simplest level (eg GCSE), the marketing mix involves 4 Ps: product, price, promotion and place, all being equally important. At a professional level, the mix involves (at least) 7 Ps.

    I'm not.

    I don't claim that at all. I'm sure Apple know exactly what they're doing.

    They have - by dropping the price by 100%. They are not "attracting" any customers at £9.99 per month. The initial offer is of a completely free service. Even here, Apple has undercut Spotify by offering Apple Music with a longer free trial.

    They are attracting even those people who only want 3 months of free music. This gives Apple the opportunity to challenge preconceptions and "convert" people who would never even have tried the service if they'd been required to pay from the outset.

    Subscribers can experience the rest of the Ps (ie including the "product" / service itself) before deciding whether they want to continue on a paid basis. Retention rates will be determined at least as much by the rest of the marketing mix as by the price.
     
  11. thedon1 macrumors 6502

    Joined:
    Jun 26, 2010
    #12
    I think this was dictated by the record companies more so than Apple. Weren't there initial rumours that apple wanted the subs to be less than $10 in the US but the record companies said no?
     
  12. BSben macrumors 6502a

    Joined:
    May 16, 2012
    Location:
    UK
    #13
    Well, if the UK had joined the Euro we would only pay €9.99.
    Fact is, in the UK we adapted to being ripped off. Amazon Prime costs MUCH less in Germany than it does in the UK, Tesco could never survive in Germany with their pricing system ( even Walmart went bust there).
     
  13. thedon1 macrumors 6502

    Joined:
    Jun 26, 2010
    #14
    Wait what? Walmart went bust here? Don't they own Asda, which as far as I know, aren't even close to going bust.
     
  14. motulist macrumors 601

    motulist

    Joined:
    Dec 2, 2003
  15. BSben macrumors 6502a

    Joined:
    May 16, 2012
    Location:
    UK
    #16
    There is no Asda in Germany, Walmart failed badly in Germany
     
  16. pjh macrumors regular

    pjh

    Joined:
    Sep 25, 2007
    Location:
    Airstrip 1
    #17
    They charge what the market will accept, which to a large degree has been dictated by record labels.

    Anyway, is the price difference really that great? £9.99 is £8.35 before VAT, equating to roughly $12.52.

    That's a 25% premium over US pricing (assuming US pricing excludes sales TAX?). That's hardly a huge difference considering the additional cost of doing business in the UK (higher taxes etc.) Though you do end up getting involved in the debate around whether Apple is paying its UK taxes!

    That's not a premium I'd have at the top of my list when considering mark-ups. Now Starbucks coffee..............
     
  17. Gav2k macrumors G3

    Gav2k

    Joined:
    Jul 24, 2009
    #18
    Your math is off.
     
  18. Martin81 macrumors regular

    Martin81

    Joined:
    Oct 14, 2013
    Location:
    Germany
    #19
    A lower price usually means more costumers. So the profit per person is lower, but you have more costumers. So in the end it can be the same overall profit.

    I'm wondering: what is better for a company like Apple. Get the most out of every customer or build a much wider customer base?
     
  19. iConnected macrumors 6502a

    iConnected

    Joined:
    Feb 17, 2011
    #20


    Whether considered before or after taxes, the UK price is higher.

    Before tax:

    US price of USD 9.99 = GBP 6.42 [rounded to nearest penny, exchange rate @ 1.5564].

    The pre-tax UK price of GBP 8.33 (9.99 / 1.2) is 29.75% higher than the US price.​

    Including tax:

    The US price might, for example, be around USD 10.75 (varying by state).
    The UK price equates to around USD 15.55.

    Tax-inclusive, the UK price is around 44.65% higher (varying by US state).​
     
  20. MentalFloss macrumors 6502a

    MentalFloss

    Joined:
    Mar 14, 2012
    #21
    Looking at Apple's profits from premium computers and devices with a rather high price, I can say: Most definitely the former.
     
  21. johngordon macrumors 65816

    Joined:
    Apr 19, 2004
    #22
    So have we reached the point where people can pay £9.99 a month to have access to pretty much everything ever recorded, and it be available on your phone in your pocket wherever you are, and people still aren't happy and want to complain? Shish.

    And yes, I know - data charges also apply yaddy yaddy. Point still stands.
     
  22. pjh macrumors regular

    pjh

    Joined:
    Sep 25, 2007
    Location:
    Airstrip 1
    #23
    My bad, I used a pound to dollar conversion rate of 1.5 vs 1.55. Thanks for the contribution.
     
  23. pjh macrumors regular

    pjh

    Joined:
    Sep 25, 2007
    Location:
    Airstrip 1
    #24
    No one would dispute that in both cases the UK price is higher, but concern over the post tax difference should be directed to the Government and not Apple. A 30% differential is not that large considering the other costs of doing business in the UK and off course hedging against currency fluctuations.
     
  24. Gav2k macrumors G3

    Gav2k

    Joined:
    Jul 24, 2009
    #25
    Vat is currently 20%. U.S. Prices do not include sales tax. There is also additional taxes/fee's that are not accounted for in your figures.
     

Share This Page