Some will tell you that Apple is a master at designing products, making them all sleek and shiny until your brain can’t take it anymore and you need to buy them. After watching and analyzing last week’s “Time Flies” virtual product event, Loup Ventures analyst Gene Munster has found that Apple is, in his own words, “the master of upsell.” So what is upselling? I’m glad you asked. According to BigCommerce.com, “Upselling is the practice of encouraging customers to buy a higher-end product comparable to the one in question.”
Apple is a “master of upsell,” says analyst Gene Munster
A good example of an upsell is when Apple is ready to sell you the iPhone 11 Pro Max with 64GB of storage for $ 1,099. However, for just an extra $ 150, you can take home the exact same phone but with 256GB of storage. Or how about this: for $ 999 you can be the proud owner of a 64GB iPhone 11 Pro with that beautiful 5.8-inch AMOLED screen.
But if you throw in just $ 100 more (less than $ 5 a month for 24 months), you’ve increased the screen to 6.5 inches and powered up your new phone with the largest battery in an iPhone yet.
The new Apple iPad Air 4 costs 20% or $ 100 more than the last generation model
The thing about Apple and upsells is that while sellers can help the customer make a more expensive purchase (“Sir, if you skip a single lunch at McDonald’s each month, you’ll pay for the 256GB model”) , in many cases the consumer will sell more himself. This is due to the familiarity of the customers with the products. According to Munster, “The reason Apple can motivate consumers to spend more is that the company builds the best consumer technology products in the world. The math is simple for consumers: products offer more value than price premiums. incremental “.
The highlight of last Tuesday’s virtual event, Munster says, is the $ 100 price increase on the Fourth generation iPad Air from $ 499 to $ 599. Throughout the year we’ve been signaling that Apple has seen growing demand for iPad thanks to the pandemic. The Loup Ventures analyst says Apple should see this as well, as it apparently feels comfortable raising the price of the new iPad Air by 20%. With more people working and studying from home, the tablet has generally become more popular. Loup Ventures says the entire iPad line represents 11% of Apple’s total revenue and the iPad Air accounts for 4% of that number. During the last reported quarter, which ended in June, iPad revenue increased 31%. According to the analyst, the iPad Air price hike should allow Apple to report growth in iPad tablet sales for the quarters ending in September and December.
As for the other major product featured at the event, Apple introduced the Apple Watch Series 6 and added the Apple Watch SE at a price of $ 279. With the Apple Watch Series 3 tagged at $ 199, Loup Ventures notes that the asking price Average Apple Watch will likely increase. The analytics firm believes that some potential Series 3 buyers will likely move on to the Apple Watch SE due to the improved features. As Munster wrote, “Potential Series 3 buyers will likely move to the higher Watch SE, given the modest $ 80 premium relative to its features. Similarly, potential Watch SE buyers will see the $ 120 premium. for the 6 Series as reasonable in relation to the additional features. In the end, we believe the 6 Series will be the most popular model. ” The new Family Setup feature allows Apple to expand the potential Apple Watch market by giving children and seniors the opportunity to own an Apple Watch without owning an iPhone. Another family member can use their iPhone to handle whatever capabilities the phone requires.
Lastly, Munster says that with the new Fitness + exercise subscription service, Apple is going after Peloton’s $ 12.99 monthly digital membership plan. While the analyst says that Apple’s software (that is, the actual training videos streamed through the tech giant’s devices) is “superior” to Peloton’s offerings, he claims that the latter has an advantage in the software and hardware integration.
