Apple’s Master Sales Strategy: Upselling
Apple should be a name known by everyone: The company with the bitten apple as their logo is the most valuable in the world and one of the most profitable ones. But how can this be the case if a phone costs about $1000? Who buys a phone for this price? Why do people give Apple such high amounts of money? You can answer these questions with Apple’s best marketing strategy: Upselling.
1.Marketing Strategies, Exposed: Apple’s way to generate enormous profits Definition of Upselling
Upselling is a special sales technique used by companies like Apple that invites us, the customers, to buy expensive items or upgrades for the product you want to purchase. Simple said the sellers try to sell you more than you actually want. This is exactly what Apple does on their website. Let me give you an example:
You’ve decided to buy yourself a new phone, an iPhone 12 Pro, to be exact. So, you go on their website, click on the iPhone 12 Pro, scroll a bit down, and find yourself forced to decide on a model: iPhone 12 Pro or iPhone 12 Pro Max? You may think “oh look, the iPhone Pro Max costs just $100 more than the iPhone Pro, so why not”. This is exactly the moment you got a victim of Upselling. Apple puts you multiple times before choices, where you can choose between a handful of options. This first decision you made, was only the first. Further, you’ll be forced to decide on the battery capacity of your phone and if you’d like to add AppleCare+ coverage. Especially the batteries create Apple enormous amounts of profit: Let’s take a look, why.
2. Marketing Strategies, Exposed: Apple’s way to generate enormous profits Cost Trap Battery
In our example above you’ll get to the point, you need to decide on your battery capacity. You can choose between 128, 256, and 512 GB of capacity. The first option doesn’t affect your standard price of $1099, for 256 GB you have to pay $100 more, and for the last one, 512 GB, you pay a mere $300 more. But let us take a closer look here: Apple sells you here a NAND flash chip, a storage medium that can be electrically erased and reprogrammed. The prices for such a chip were at ~6 cents/GB in August. If you buy a battery capacity of 512 GB, so 384 additional GB, you pay $1.28/GB. This is about 21 times above the market price.
How much profit Apple gains exactly with the sale of batteries, you can’t really say, but still, changing batteries is one of the most profitable ways for Apple to achieve big profits. To say it in the words of the Bloomberg Businessweek:
“Storage is one of their levers to create more revenue and is absolutely the most profitable iPhone feature”
I don’t think I have to say more.
3. Marketing Strategies, Exposed: Apple’s way to generate enormous profits Evil, Final Touches
Additionally to this Upselling-strategy come some small points which give the strategy its final touch:
- Apple’s website looks very decent for customers, it’s easy to understand, clear, and discrete. It creates a feeling of “we’re not forcing you to anything, just take a look ;)” which makes this whole Upselling procedure even more effective.
- The end price of your Apple product gets blurred by the end when Apple offers you to pay in small installments, you think you made a good deal with about 60 bugs a month, but in reality, you’re going to spend $1400 for a phone. A phone. You can buy yourself a high-end gaming PC for this amount of money!
- This whole procedure through decisions over decisions make you feel that you’re making the right choices, in the end, you don’t want to have a phone with not enough storage. You’re trying to decide rationally, what is exactly what Apple wants, that you think, you just acted right, and took the right choices.
As you can see, Upselling is a good, but terrifying strategy to create huge profits with your product by selling upgrades. Apple, of course, isn’t the only company using this method but, surely, Apple is a master in using it. The perfect interaction of web design and upselling makes it for customers a deadly cost trap you can’t get out of if you don’t know what awaits you.
