Iphone – Lost $200? Learn from Steve Jobs and Mike Filsaime

How can you profit from spending $200 more for your Iphone than the new retail price and at the same time learn a valuable marketing lesson?

Thousands of people were willing to pay $600 to own a fancy new gadget

  • Many wrote about it on their blogs (for traffic or enhanced credibility)
  • Thousands were the envy of their friends (did you really keep it hidden?)
  • Lots no doubt benefited from some level of enhanced productivity or connectivity

You Have Now Been Scammed Out Of $200?

Lots of people are coming down very hard on Apple, posting about how you might be able to get a rebate if you have owned it for less than 14 days.
I am not sure whether that is purely a reaction to the difference in price, or what I feel is a greater factor, the difference in perceived value, and prestige.

You will no longer be showing off a $600 phone that not everyone could afford, it is a $400 phone, and those with just 4GB of memory have an outdated model.

This might seem a little cynical, but I live in Europe and didn’t even have the chance to buy an Iphone and reap the benefits.

I am sure if my father-in-law saw me using an Iphone one Sunday he would openly chastise me for spending so much money just on a mobile phone, but secretly there would be a certain amount of envy, and possibly a gain in understanding and credibility – the next day he would go visit his friends and proclaim how successful his son-in-law is, and spend hours talking about a gadget he doesn’t really understand the advantages of.

In many ways spending that extra $200 as an early adopter makes more sense than buying an Iphone for $400 now.

People frequently refer to the productivity benefits of buying 2 or 3 30″ Apple Cinema HD Displays, which retail for close to $2000 each (but can be picked up on Ebay for far less)

The depreciation on those monitors is probably very similar to that of the Iphone, but you benefit from it anyway.

When you buy a new car, you lose 30% of its value as soon as you put the keys in the ignition, but people still buy new cars, often at a premium rather than waiting for a special offer later in the product life cycle.

Which brings me to Mike Filsaime, once a car salesman, but he knows an awful lot about product pricing.

Mike Filsaime on Product Pricing

Mike wrote an article about the connection between Fish, Poles, Boxes and Buttons, but it is really about product pricing and return rates.

What Mike writes totally flies in the face of concepts such as “Teach a Man To Fish, Feed Him For A Lifetime” and is based upon his actual sales figures and refund rate.

  • Fish: Teach “How to” Catch Fish – 10% of market, high refund rate.
  • Pole: Sell The Pole – 20% of market, medium refund rate
  • Box: Give Him The Fish – 30% of market, Low Refund Rate
  • Button: Prepare the Fish Dinner – 50% of market, Pays a Premium, keeps coming back, and virtually no refund rate.

I suppose you could also compare this to TV dinners and take-away food, and how food your partner makes always tastes nicer than food you make yourself (assuming you can both cook)

How To Make A Profit On Your $600 Iphone

If you study Ebay, you will notice that the phones people want to buy are not those that are direct from Apple or AT&T stores. People want to buy unlocked Iphones.

Iphone 8GB Unlocked

The sellers are offering a premium product for those people who are willing to pay for a premium service.

If you had the technical skills or access to Iphone unlocking software, right now you literally have a license to print money (and lose it all when Apple and AT&T sue you, but that is another matter)

It could be possible to create a premium bonus to allow you to resell your Iphone at a higher price, maybe as much as $20 or $30 more, if you offer plenty of hard to find information and tips on how to use the Iphone effectively, maybe with video.

If it does help you sell at a higher price, you have a product you might be able to sell separately, or in some way sell the rights to it to other Iphone sellers looking to make a better margin.

Maybe it could be turned into an Iphone owners club, with the bonus as a loss leader you effectively give away to build up a list.

How You Really Make Money From This

Just by understanding what drove you to be an early adopter of the Iphone, and what intrinsic benefits encouraged you to buy one is a marketing lesson in itself, and could well be worth the $200 or more it cost you in being an early adopter.

Final Quote From Steve Jobs Himself

In an interview today on USA Today, Steve Jobs said the following:-

No, he didn’t say you will get your money back (unless it is as suggested above recently purchased)

What he did say was

I own every Bob Dylan album ever, but I buy a lot of it on iTunes, because I guess I’m just too lazy to rip it from the CD.

Learn from Steve Jobs and Mike Filsaime

Update

Forget about the $100 coupon offered by Steve Jobs, if you purchased your Iphone using a credit card you can possibly get the full difference in price refunded.

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Comments

  1. says

    I must say I don’t get the explosion of complaints. Everyone knows prices for IT stuff decline over time (and pretty fast too). Granted this was a bit quick even for IT stuff but otherwise just the normal process. But Apple was smart to react to the complaints. We will see if people are happy with the $100 gift certificates.

  2. says

    Makes you wonder about early adopters of Apple products, and wonder even more about Apple as a company, and the way they take advantage of their almost maniacal groupies.

  3. says

    Andy,

    This isn’t related to this post, but there is something wrong with your sidebar on your home page. Toward the bottom right hand side of your navigation there are some strange error messages.

    All the best,
    George

  4. says

    Yes, consumers are getting spoiled these days.

    I also know that when I buy a new computer or a graphics card that in 3 months I could get it for 30% less or even get a new card for the same price that would double the performance.

    Or maybe people are just angry at themselves for their emotional decision to buy something for $600 which is really worth $300 and they fell for the hype.

  5. says

    As usual, great post Andy. Thanks for the heads up on Mike Filsaime’s product pricing article – it’s given me a few ideas that I didn’t think of in terms of types of products to create. I’ve recommended that particular article to several people now.

    Cheers mate,

    Zain

  6. says

    The only thing that surprises me here is that Apple have brought the price down by such a large amount (relative to the original retail price) so quickly.

    I have to say though that the trend of gadgets becoming cheaper over time is not a new one, and as a shopper, should be perfectly expected.

    People who want a new gadget first should always expect to pay a premium – as has already been mentioned on here, look at how much computers go down in price and what about cars, video game consoles, mobile phones, etc. The list goes on.

    I don’t see the problem – this isn’t Apple taking advantage, this is just economics in action – surely?

  7. says

    In my opinion apple is absolutely ridiculous for giving money back like this since it was no surprise that the price would drop sooner or later anyways. It sucks, but it’s just the way how it works in the IT section. When I bought my iPod in example it was 2 days afterwards when Apple announced they’d be pumping them up to 80GB, did it really bother me? No, it’s simply the way it goes.

    Look at any purchase you made and everything drops at some point, if you’re not really wanting to pay the extra money to begin with then simply wait for the price drop as well, don’t go asking for the difference in money back or complain about it.

  8. says

    I think an Iphone is too advanced for today. Yes, I think the world is not yet adapted for the Iphone, the services for using it is too expensive. This new is just too bad for Ebay seller who trying to sell Iphone. This is something that can take a business down. :D

  9. says

    At least Steve Jobs gave iPhone Users the rebate for those who already bought one already.

    Guess it still seems like you’re being punished for being one to believe blindly in Apples products and buy it immediately.

    (Just catching up on your blog Andy. Haven’t been to it in a while)

  10. says

    It’s intresting to see the different opinions on this topic in the comments. But I have to agree. Early adopters are always those that pay a part of the production sum. They dont’t have to wonder if prices drop and they paid more than before. I mean even the laptop that I’m writing this on is available for less than what I have paid last week.

    Thats just the way it goes with technology. Be it cars or compupter electronics.

  11. says

    Good reasons to wait when new technology comes out:

    1. Electronic devices like the Iphone are always too expensive at first.

    2. Manufacturers always come out with an improved product after a couple of years. Iphone is no different. Practice some patience for God’s sake.

    3. A 4 GB Iphone is just ridiculous considering there are 80 GB mp3/mp4 devices out there.

    4. Most men have at least 2 pockets, one for the cell phone and one for the mp3 player. What is the hurry?

    5. Most women have huge purses.

    6. The 2G (2nd generation) Iphone is supposed to be released in May 2008 (now). Those who waited are going to be pleased. The rest will have to upgrade (for a fee?).

    7. Like a new automobile design, it is never a good idea to buy the first year model. All of the bugs have not been worked out and it usually makes weird noises when running down the road.