How to Save on Your Next Apple Purchase

How to Save on Your Next Apple Purchase

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But in general, prices jumped. That was surprising given that product costs typically fall as technologies mature and parts become widely available, which was what happened with televisions.

The more I examined the pricing, though, the more evidence there was that the latest Apple products are more expensive to make. Apple also appears to be under pressure to introduce more complex innovations to compete in the brutal technology market.

Take a look at the company’s gross profit margin, or the money it makes from products after the cost to make and sell them is factored in. If Apple’s gross margins are lower today even though prices are higher, that indicates the products cost more to make.

And that is indeed the case. Toni Sacconaghi, a financial analyst for Sanford C. Bernstein who has studied Apple for years, estimated that the company’s gross margins for the iPhone were below 40 percent, down from more than 50 percent several years ago.

Mr. Sacconaghi said the shrinking margins demonstrated how tough it had become to compete in the technology market. Apple has had to add features like stronger metals, sophisticated cameras, high-resolution displays, advanced chips and faster wireless connectivity while trimming back on some profit given that rival products from the likes of Xiaomi, Huawei and Lenovo have become very capable. If Apple had wanted to keep profit margins consistent with past years, he said, it would have had to raise prices even higher and risk losing sales.

“You have to put in more to stay competitive, or you’re going to lose share,” he said.

Jared Wiesel, a partner at Revenue Analytics, a pricing and sales consulting firm, said Apple was still in a unique position to introduce broad price increases. Other companies, such as grocery brands, lack the clout to do so because their competitors might undercut them and lure away customers.

“They’re in the very enviable position that they can, by and large, take major action across the board without, so far, seeing a major erosion of loyalty as a result,” Mr. Wiesel said.



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