by C.G. Lynch

High iPhone Pricetag: Will Consumers Push Back?

Jul 25, 20074 mins

When I learned last night that iPhone sales might be falling short of expecations, I wondered if 21st century consumers had finally pushed back at a company for overpricing its product. I hoped they were collectively saying, We don’t care how cool your product is. We don’t want to pay $600 for a cell phone!

But unfortunately, that probably won’t be the case. The news from AT&T has to be viewed cautiously because it only tells a very small portion of the iPhone story. It details how iPhone sales did in two days of the previous quarter, noting they only sold somewhere near 145,000 when investors thought it’d be closer to 500,000-700,000. But if Steve Jobs reports during today’s earnings call all of the iPhone sales since the product launched, maybe it’ll show that people think the price is perfectly reasonable. Rumors have circulated that Apple will say it has already activated at least a million iPhones.

A week before the iPhone hit stores, a friend of mine who was thinking of buying one sent me a chart, wooing me with all the great functionalities the device would have and how it would blow the competition out of the water with its thin size, huge screen, long talk time and access to Wi-Fi hotspots. But there was one thing conspicuously missing from this chart: price.

I wasn’t terribly surprised to learn a few minutes later that a 4GB iPhone was $499 and an 8GB $599. Technologies this innovative which break new ground obviously tend to be more expensive than the rest. So the price, while high, seemed acceptable. 

Or is it?

Push back is something we’re not prone to anymore as consumers. I can think of a relevant example.  I myself have been known to go to Fenway Park and spend a good portion of my week’s pay on a $100 (face value) ticket and a few warm $8 beers and cold $6 hot dogs while I cheer on millionaires who affect my sanity in profoundly unhealthy ways. The Red Sox are, in many ways, like any company – and I’ve shown an unwavering willingness as their customer to make no demands on them from a financial standpoint  because I think their product is superior to the competition. And if I did pushback, there’s somebody behind me in line who will gladly fork over the dough.

Apple consumers are very much the same. We’ve been pushovers as consumers. We’ve shown a frequent willingness to fork over whatever we’re told to pay because their products have been so much, well, better than the rest. Apple has consistently set the standard for the price of mp3 players (I paid 300 bucks for an iPod without flinching), so why should they think they can’t do the same with the iPhone?

But unlike consumers, businesses seem more than happy to pushback (since they usually pay more attention to the bottom line and to staying in the black than consumers do here in Credit Card nation). 

So far, as this journal article shows, it’s mostly been for reasons of integration, but I wonder if price plays a factor? Would a CIO or an IT manager fork out hundreds of dollars extra for iPhones when you have the option of a cheaper BlackBerry which you already have servers in place for?

It’s funny I find myself writing that last sentence, because normally I’d be the first one to say, “Let your users have the iPhone because the ease-of-use and the stunning features will surely be of value to them (and, in turn, the company) so they’ll be more productive workers.”

But the angry consumer who is tired of being pushed around thinks you probably shouldn’t.

Not yet, anyway.