Apple clearly stands out from all other companies, not only with the products they have on offer, but also with their ability to maintain a higher pricing schedule and thus profit margin than most manufacturers. The secret behind their success appears to lie in their utilisation of a very clever two-pronged pricing strategy.
Macworld’s Marco Tabini explains that Apple prices their merchandise quite cleverly when taking into account their wholesale prices and their smaller wholesale discounts. Because of Apple’s strong appeal and the traffic they undoubtedly bring to any retail outlet, the Cupertino Company does not need to offer resellers a significant markdown. Thus stores that stock Apple products don’t tend to make much of a profit for themselves on Apple merchandise.
In contrast Apple is also known to provide significant monetary incentives to resellers to supplement their small wholesale discounts. What’s more, the Cupertino Company normally gives the biggest incentives to those retailers that are willing to advertise their apple merchandise at the ‘minimum advertised price’ (MAP).
Ultimately what this means is that Apple is able to safely sell their merchandise with their own profit margin, without having to compete with other companies who could possibly sell it for lower, because this possibility has been eliminated by their clever strategies. Additionally it is highly unlikely for any retailer to gain a huge advantage over the iPhone company in this manner.