Iphone 5C price decision Essay example

1317 Words Sep 28th, 2013 6 Pages
The fist factor that important in the pricing decision of iPhone 5C is by considering costs. For instance, since Apple Inc. wants to maximize its profits through establishing new products, the price should be set at the point where marginal revenue equals to marginal cost. We know that iPhone 5C is in the perfectly competitive market, the company can reach its maximum profit at equilibrium at X* and P*. To determine the price, Apple Inc. needs to do the marginal analysis. According to profits (π) equals to total revenues (TR) minus total costs (TC), which is π=(P*X)-(fixed cost+variable costs per unit *X), X is the number of units sold by Apple Inc. Of course, manager needs to ask several departments and contractors to know the cost of …show more content…
We can figure out that the competitions in the smartphone market are quite intense, there are numerous competitors and are almost equal size, such as Samsung, Microsoft. So, Apple Inc. has to investigate the cost leadership and the unique producers in order to make a competitive price in the smartphone market. The website take the example of Moto X, which has 18 kinds of colors and the functions are really similar to iPhone 5C (Darren, 2013). The price of Moto X is $599, so the manager should decide a lower price than it to gain a competitive advantage. In particular, the competition is not just from the external market, we know that Apple Inc. promoted iPhone 5C as well as iPhone 5S at the same time. To iPhone 5C, the manager needs to consider about the plastic case, which is $42 less than the metal case cost of iPhone5S (Ben, 2013). So manager should also compare the 5C’s price to 5S. It is an important thing to keep secret of the product’s price before they coming out. The manager of Apple Inc. can survey the expected price of the public, or conduct some historical sample tests before making the final price decision.
The third factor that important in the pricing decision of iPhone 5C is the manager should estimate the demand. Assume that we are suffering a financial crisis, most people don’t have extra money to pay for new electronic devices. They have already owned iPhone 5 or iPhone 4S and do not want to pay for another similar product. Then the

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