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How does Apple keep its prices so regular?

It's not just the iron will of Tim Cook…

New Statesman
Photograph: Getty Images

Why do you never see Apple products discounted? Everyone knows to shop around if you're buying consumer electronics. It's a market where there are often vast discounts over the recommended retail price, and where buying direct from the manufacturer, if its possible at all, is a way to guarantee you get ripped-off.

Except, it seems, Apple. The company maintains a cast-iron grip over its prices, and a huge quantity of its sales are direct. How does it do it? Macworld's Marco Tabini explains the two interconnected methods it uses.

Firstly, the company only offers a tiny wholesale discount to third-party resellers:

The actual numbers are a closely guarded secret, protected by confidentiality agreements between Cupertino and its resellers, but the difference probably amounts to only a few percentage points off the official price that you find at Apple’s own stores.

That small discount means that most stores can't offer much money off without losing money on every Apple product sold — but it also lowers the motivation for them to do anything with Apple at all. After all, if they make 30-55 per cent per generic Windows laptop sold, they are likely to push them much harder to customers, and may decide there's not even any point in stocking Apple at all.

That's where the second method comes in. Apple offers "substantial monetary incentives to retails who advertise its products at or above a certain price, the "minimum advertised price". Tabini writes:

This arrangement enables retailers to make more money per sale, but it prevents them from offering customers significant discounts, resulting in the nearly homogeneous Apple pricing we are used to.

It also explains why, particularly in the US, where they are more common anyway, mail-in rebates are so common on Apple gear. It allows the retailer to "advertise" the laptop at the minimum price, while still undercutting Apple on the final sale price.

All of that doesn't prevent companies offering discounts on Apple products where they can, though. Both PC World and Amazon UK offer substantial discounts on a couple of Apple laptops, while the company itself offers a lot of under-advertised, but potentially large, discounts for certain groups (not just students, but some professions too). Maybe the old myth is worth busting, and its time to shop around for that company as much as anyone else.