iPhone Pricing

One of the big questions surrounding the Apple iPhone is, well, how much will it cost? $499? or at the higher price point of $599?

(Economists know that pricing the iPhone at anything in between is silly, because of people's perceptions of the price.)

The iPhone's $499 and $599 price points are still a hot topic of debate in the geek world, and many Maclots have somehow justified to themselves that they can (and will) spend the money on it. But what does the rest of the general public think?

Market research firm Compete Inc. conducted an online survey of 379 participants recently (really, 379? C'mon guys, I'm sure it's pretty easy to get more participants than that online) about whether they would be willing to buy the Apple iPhone at its current $500 price point. The results were not all that shocking: of the 26 percent who replied and said they'd buy an iPhone at all (so that's what, 99 people?), only one percent—roughly 1 respondent—said that they would pay $500 for the device.

One is a very lonely number indeed. 

42 percent of those who said they'd be willing to buy an iPhone said that they'd be willing to spend $200 to $299 on it, which I do admit is a much more attractive price tag than $499. Analyst Andy Neff from Bear Stearns & Co. told IDG that it's likely that Apple will debut the phone at this price at first, but will likely drop the price by $100 to $200 as Apple targets the mass market. If the results of this (extremely small) survey are any indication, Apple's going to have to if they want the iPhone to achieve iPod levels of consumerism nirvana. 

Well, the sensible thing to do is to bring it in at the higher price point and sell it to those who will in fact pay that much first. Then, 6 months later, bring in the upgraded model, drop the price of the first one and maintain the market segmentation.