Your accounting logic is sound and I can get to $1399 too that way too. Others have offered this idea of Apple retiring the M1, moving the 13" down to $999 and slotting this in at $1199. That math seems logical too and I can see how they get at it as well. If we base pricing solely on the cost side, Apple could also take a big knife to its high 40%+ margins and cut all product pricing by making that target still a very impressive 15%-20%. Per tech industry standards, that would still be incredible margin... and probably make pricing of this thing down in the $800-$900 range possible... and still quite profitable.
However, flip the thinking from cost-basis logic to executive profiteer logic:
- Do we perceive high desire for this product? YES! (almost enough said right here)
- Would we be able to anticipate pent-up demand for this product? YES! Is that not obvious?
- Are we bound by cost-basis accounting to set pricing? No
- Do we have much concern about would-be MBpro buyers perhaps opting for this and cutting some revenue & profit we would have made on those sales? Yes
- If we jack this price, might we create a seemingly illogical price conflict with MBpro pricing? Yes, but we could "fix" that by jacking prices of MBpro in the fall with the launch of the "in short supply", "most powerful Mac ever" M3 versions. We'll have a natural reason to increase those prices and that will get the relative pricing back to "normal" between Air & Pro... while making us more money on either purchase. (this exec probably gets a promotion).
- Is there a history of our fans paying up at whatever we ask? Yes, we just managed to get broad price acceptance by selling iMac 27" WITHOUT the computer, keyboard and mouse at the old iMac 27" "starting at" price range. They'll pay anything we ask... and then evangelize it as the one and only right product for anyone else shopping for the same.
- Do we need some extra profit to help towards "another quarter of record revenue & profit" aspirations? Yes, we always want 'mo money'
- What happened to the last exec who suggested we lower prices and/or cut margins? Fired.

- Is our first obligation to our shareholders to maximize ROI? Yes
- Do we ever try to maximize ROI by cutting price and/or thinning margin in some kind of volume play? (exec laughter and then) "Never."
"So let's take this thing out at (my guess about) $1699. If we get mass price rejection, we can offer some deals through third party reseller partners to move inventory. However, our research shows that our market will most likely react with "might as well get a pro" and we have (rumored plenty of) inventory there to move anyway that already has sunk costs in it."
My actual guess is "starting at" $1499 but with the one SSD problem, so add $200 to resolve that slowdown issue = $1699. Get more than stock RAM too and it's basically priced HIGHER than MBpro through third party or refurb deals now.
Again, I'll hope right with all that we get this MBair 15" for $1399 or even the $1199 that some suggest. While we're at it, let's hope in other MBpro features too like the superior screen and multi-monitor support too. Then I rethink all that with "this is modern Apple Inc. we're talking about."
If $1199-$1399, I suspect many, typically MBpro buyers will opt for this Air instead... and then not be moved to buy another laptop as soon as only a few months from now when perhaps M3-based PROs arrive. I myself have only ever been interested in MBpros but I'm intrigued at stepping down a little bit of power for a lot of cost savings... and then doing any heavier lifting on the desktop Mac when I get back from any road trips. I bet I'm not the only one.
Thus, I'd personally welcome what would be a shock to me at $1199-$1399 for this... but I don't have that expectation at all. I 100% hope I'm wrong. We'll see in a few days.