Price fixing by Apple?

[IJ Reilly]

Also, I'm not convinced that resellers are all that free to cut the price below the MAP. Earlier posts in this forum suggest that Apple can apply pressure against this, perhaps by threatening to revoke the reseller's license with Apple? If Apple isn't trying to fix (set, control) prices, why do retailers have to resort to gimmicks like "we pay the tax special" rather than just being allowed to honestly tell the customer what their intended sell price is. Talk about a house of mirrors ...

Quite clearly, a manufacturer would run afoul of the law if they strong-armed retailers into selling at a prescribed price. As I mentioned earlier, retailers even find ways around MAP. However, if efforts to eliminate the "Dr Miles" rule are successful, then manufacturers would be allowed to set retail prices in a way which has been illegal since the demise of "fair trade" laws.

 

[Lancetx]

I've never paid full retail price for a new Mac or iPod ever, so I'm not sure what all of the fuss is about. If you simply take a little bit of time and actually shop around, it's fairly easy to find Macs and iPods marked down at various Apple authorized retailers, both online as well as at B&M locations. For example, when I bought a new MacBook back in February, CompUSA had an advertised sale offering 5% off instantly on all Macs, plus 18 months same as cash. Amazon is another that routinely has discounts on both Macs and iPods. These discounts aren't that hard to find.

 

[mgguy]

I've never seen Apple computer and iPod prices marked down by more than $5 at any of the large computer retailers like Fry's and CompUSA. Lancetx, are you sure the products on sale were not refurbished or out-dated models? Have you ever seen prices marked down by more that what could be saved by "we pay the tax special" and other such work-around promotions? Can retailers sell iPods at a 20% reduction if they wanted to? If so, can they also advertise these prices without retribution by Apple? If they can, then I would have to concede that Apple does not fix prices. However, if they are not allowed to advertise lower prices, then I would still contend that it is price fixing because it obstructs the selling at lower prices as a result of customers not being aware of the offer.

 

[Grimace]

call a lawyer. we've given you a LOT of info and you argue, discount, or twist our efforts. Do I need to tell you that I have a law degree? (please don't call me.) I'm not sure what authority you seek.

 

[Lancetx]

I've never seen Apple computer and iPod prices marked down by more than $5 at any of the large computer retailers like Fry's and CompUSA. Lancetx, are you sure the products on sale were not refurbished or out-dated models?

The MacBook C2D I got there was the current model and it was definitely brand new/sealed and not a refurb. I got my iMac new there the same way last year. They've actually run that promo there a quite a few times over the last couple of years or so. There were even threads here on Mac Rumors about it...

https://forums.macrumors.com/threads/279731/

https://forums.macrumors.com/threads/282010/

 

[Le Big Mac]

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.

The LA Times article is a good starting point. Basically setting minimum prices is generally legal. The rationale is that if the company sold its products directly it could do this. Say Apple had Apple Stores, but didn't also sell through CompUSA etc. It could definitely set its prices the same in every store. So the rationale is why not let them do it when they sell through a distrbutor.

There are benefits to consumers from allowing MAP policies. Primarily, it allows a company to ensure a certain minimum level of service and support. If anyone could discount, no one would have resources to provide beneficial instore support and training. Also, Apple has an incentive to ensure its MAP prices are competitive with other companies (they do compete with PCs).

 

[snowmoon]

call a lawyer. we've given you a LOT of info and you argue, discount, or twist our efforts. Do I need to tell you that I have a law degree? (please don't call me.) I'm not sure what authority you seek.

I think therapy would be cheaper.

 

[mgguy]

Grimace, I'm sorry but your arguments have just not been convincing, your law degree aside. In fact, your statement that retailers may not be able to advertise a lower price because of Apple's MAP restriction tends to support what I have been saying rather than refute it. Lancetx, on the other hand, has presented a much more compelling case by giving specific examples of retailers that have freely advertised lower prices, thereby proving both of us wrong.

Snowmoon, you really need to chill out. This forum is not well served by personal attacks. Forum participants get much more out of the discussion if you stay focused on the subject matter of the thread.

 

[IJ Reilly]

The LA Times article is a good starting point. Basically setting minimum prices is generally legal. The rationale is that if the company sold its products directly it could do this. Say Apple had Apple Stores, but didn't also sell through CompUSA etc. It could definitely set its prices the same in every store. So the rationale is why not let them do it when they sell through a distrbutor.

There are benefits to consumers from allowing MAP policies. Primarily, it allows a company to ensure a certain minimum level of service and support. If anyone could discount, no one would have resources to provide beneficial instore support and training. Also, Apple has an incentive to ensure its MAP prices are competitive with other companies (they do compete with PCs).

I think you are confusing MAP and retail price. It's legal for a manufacturer to set minimum advertised prices. It is not legal under current U.S. law to set minimum retail prices. You've probably seen many retail web sites that say "add to shopping cart to see our price." That's because the manufacturer has set a MAP for that product. Once you've "asked" the retailer for their price (by adding to your cart), then they can reveal their bottom line. You can do the same in a bricks and mortar retailer. Just don't expect great discounts on Apple gear -- their margins aren't huge.

 

[localoid]

Reading Wikipedia's article on resale price maintenance, commonly referred to as MAP (Minimum Advertised Price) along with its article on price fixing would probably be a good starting place for anyone trying to understand the differences between the two...

 

[IJ Reilly]

Reading Wikipedia's article on resale price maintenance, commonly referred to as MAP (Minimum Advertised Price) along with its article on price fixing would probably be a good starting place for anyone trying to understand the differences between the two...

The first article makes an awful muddle out of the subject by combining two dissimilar concepts, "resale price maintenance" and "minimum advertised price." You have to read almost all the way through to understand that "resale price maintenance" is illegal in the U.S., but MAP is not. This causes the first sentence of the article to be essentially a false statement.

 

[Lancetx]

If anyone cares to know, you can check out sites like Dealmac and Mac Prices as they do a pretty good job of listing current deals on both new and refurbished Macs and iPods at various retailers. I'll admit that B&M advertised specials on Macs are more rare than finding them via online outlets, but they're really not as hard to find as one might think.

As for iPods, it's actually fairly common to see them marked down in weekly ads from places like Circuit City, Best Buy and even Target. Just this past weekend, CompUSA had all iPods on sale for 10% off, but that was a 2 day only anniversary sale I do believe.

 

[balamw]

Can retailers sell iPods at a 20% reduction if they wanted to?

Just don't expect great discounts on Apple gear -- their margins aren't huge.

There was a thread some time ago of someone with an inside connection who bought their iPod from a major retailer at the wholesale price. I seem to recall that the then $299 iPod was ~$249 or $259 from Apple to the retailer. So the distributor's profit is only $40 or $50 for each $300 iPod sold.

So why again would you ever expect to find iPods on sale for $60 off (20% of $300) that would then effectively be sold at a loss when they are selling just fine without this?

I understand the theory behind loss leaders, but still...

B

 

[Scorpius]

I can confirm the 5% off all Mac computers at CompUSA a month ago. I noted the sale at the local C-USA and the prices were marked down from the usual retail price. All brand new notebooks, NOT refurbs. You don't see it much, but it happens.

 

[mgguy]

Well, there it is. Another example of retailers marking down prices and advertising it. I stand corrected: Apple does not fix prices. 5% off is not much of a reduced price, but it is one nonetheless. Thanks for the information people have shared on this subject in this thread. Hopefully, as a result, we are all a little better educated on Apple's and resellers' business arrangements. I know I am.

 

[BigPrince]

Did not read the whole thing, forgive me if this being repetitive or already discredited.

I sell product 123 to regular customers for price X.

I sell product 123 to retailers for price Y.

If price X and Y happen to be the SAME or VERY CLOSE, this would result in retailers having to sell for price X or VERY CLOSE everywhere. Otherwise they would lose money.

I THINK Apple products MAY be more for attracting people INTO the store then to make a huge profit off of.

Hell what does Apple care if its sold in a store or online store?

just my 2 cents.

 

[Grimace]

Well, there it is. Another example of retailers marking down prices and advertising it. I stand corrected: Apple does not fix prices. 5% off is not much of a reduced price, but it is one nonetheless. Thanks for the information people have shared on this subject in this thread. Hopefully, as a result, we are all a little better educated on Apple's and resellers' business arrangements. I know I am.

Unfortunately, you still don't get it. Even if Apple "fixed" its prices somehow -- that would be legal and not price-fixing! If it slapped a $299 sticker on every iPod and everyone sold it for that (remember 25c packs of gum?) -- it is still legal!

Price-fixing is anti-competitive collusion between two or more companies selling similar or identical products, when the process eliminates consumer choice. It is a covert cooperative corporate conspiracy to cover up jacking up prices with no market checks.

Moving along...

 

[mgguy]

Grimace, with your law degree I'm surprised that you haven't taken the time to read my earlier posts in which I more than once clearly conceded the issue of legality. For example, quoting myself: "I don't think anyone really believes that Apple is engaged in price fixing as it is legally defined. I raised the issue of legality as a question in my initial post to stimulate the conversation and get someone to explain why it isn't illegal." I'm afraid your last post may be creating more confusion over issues that have already been resolved.

 

[MacAnkka]

Grimace, with your law degree I'm surprised that you haven't taken the time to read my earlier posts in which I more than once clearly conceded the issue of legality. For example, quoting myself: "I don't think anyone really believes that Apple is engaged in price fixing as it is legally defined. I raised the issue of legality as a question in my initial post to stimulate the conversation and get someone to explain why it isn't illegal." I'm afraid your last post may be creating more confusion over issues that have already been resolved.

So you agree that Apple isn't involved in price-fixing?

I'm afraid I'm having trouble following what this argument is about.

 

[mgguy]

I'm saying that if Apple has been attempting to fix (set, control) prices, it hasn't been successful. Several participants in this post have given examples where resellers do indeed reduce prices and even advertise such.

 

[TheAnswer]

Everywhere I look the prices are almost identical, and there are never any markdowns except for refurbished goods...

Remember back when there was no Apple Store? Prices were pretty similar across the board. When the Apple store came out, Apple kept their retailers happy by promising not to undercut them on price.

If you simply take a little bit of time and actually shop around, it's fairly easy to find Macs and iPods marked down at various Apple authorized retailers

I've never seen Apple computer and iPod prices marked down by more than $5

I'm saying that if Apple has been attempting to fix (set, control) prices, it hasn't been successful. Several participants in this post have given examples where resellers do indeed reduce prices and even advertise such.

Now that this brick wall seems to be crumbling, can someone point me towards another that I can keep banging my head into.

 

[Cepe Indicum]

I'm saying that if Apple has been attempting to fix (set, control) prices, it hasn't been successful. Several participants in this post have given examples where resellers do indeed reduce prices and even advertise such.

I think the confusion remains in this thread, mcguy, because you keep using the word "fix". Nobody can successfully argue that Apple is engaged in price fixing (as you have already conceded several times).

Retailers of Apple products will, more than likely, sell Apple products at similar prices in order to maximise their own profits. They will purchase the goods from Apple at wholesale prices, and sell them at retail prices.... the prices are similar due to the fact that retailers will want to gain as much of a return as possible on their goods, without selling them at a higher price than Apple itself.

 

[Artful Dodger]

Reading Wikipedia's article on resale price maintenance, commonly referred to as MAP (Minimum Advertised Price) along with its article on price fixing would probably be a good starting place for anyone trying to understand the differences between the two...

A good starting point would be to read from a book or a site that has the correct info and not info that can be modified by anyone. The biggest "Pet Peeve" I and most other educators have is most people think Wikipedia is great for everything. When you need the purest/truest fact it is not a good starting place and when it concerns legal, medical and education issues/rules/laws it can really confuse people even those that know better. Just look at this thread…
I'm not hammering on you just what Wiki has become and how some think it's written from blood. I like to say "the wall is smarter, it knows to hold up the roof"©, that is a fact. There are much better sites out there to get info and gain knowledge from.

 

[Artful Dodger]

I think the confusion remains in this thread, mcguy, because you keep using the word "fix". Nobody can successfully argue that Apple is engaged in price fixing (as you have already conceded several times).

Retailers of Apple products will, more than likely, sell Apple products at similar prices in order to maximise their own profits. They will purchase the goods from Apple at wholesale prices, and sell them at retail prices.... the prices are similar due to the fact that retailers will want to gain as much of a return as possible on their goods, without selling them at a higher price than Apple itself.

I think the same as if I were selling something I would want to make $20 from said sale every time rather than adjust prices just to sell a few more. My local camera shop sells Nikons for the same price all the time, never really a sale other than a mail-in rebate so are they price fixing? No they have an amount that they wish to make every time and people know that they will get the best deal today or months from now.
Does this mean that because "all" the car washes in my area are the same price they are price fixing? Many factors are envolved, water, gas, supplies and so on. Same with stores and Apple. Why would a store sell an iPod for less than it cost them? What would you call that other than stupid for not making money
I think the focus is more about understanding economics than price fixing with this thread. Or at the least everyone has said the same things only in different ways for three pages

 

[mgguy]

Artful Dodger, actually, if you had a good understanding of economics and business models you would realize that sometimes there is a greater profit potential in reducing prices, even below costs. How else can you explain why there are so many extreme markdowns in every Sunday ad by Fry's, CompUSA, and others? Would you consider these companies "stupid?" I disagree that "they have an amount that they wish to make every time." Businesses are constantly changing their prices and the profit margin on various products they sell. What is it about Apple products that make them so different?