Finding Holiday Discounts on iPods?

jeffy124 asks: "I was hoping to get an Apple iPod for Christmas. Alas, it's too expensive and out of the budget. So I'm forced into purchasing it for myself. Hoping to cash in on a holiday season bargain, I've been keeping my eye on the sales circulars that come in the newspaper. I've seen plenty of discounts for MP3 players of all kinds (Rio's, Dell's new HD-based player, etc), and the iPod has also shown up. Christmas does not yet seem very merry to me. They're always at the regular $299/399/499 price, never at a discount of any sort. You read that right, it's 'for sale' at the *regular* price. Stores guilty of this include Best Buy, Circuit City, Target, and CompUSA. Why do stores do this? How often? And does anyone know why Apple has been singled out while their competition has gotten their products discounted? Anyone know who *is* granting discounts on iPods this holiday season?"

"The other day came in the mail a 10% off coupon for various items at Best Buy, including 'MP3 Players' as indicated on the front of slip. Hoping this was how I was gonna get that discount, I set aside time this weekend to drive to Delaware in order to skip out on my local state sales tax too. I turned the coupon over, and in the legal disclaimer was the phrase 'Excludes Apple iPod Players.' Needless to say, a Merry Christmas is still aways off."

Comments

The time to shop...

[Anonymous Coward]

...is after christmas. That is when all the best bargains are found.

apple fixes the price

[websensei]

because they can. (boring).

next issue?

Re:apple fixes the price

[wolrahnaes]

The difference is that the RIAA has all but a monopoly over the music sales at major retailers. You have no real option except to buy from them. OTOH, Apple has no such thing. They charge what they want fot their products and people will still pass up cheaper items because the Apple products are either better (iPod), cooler (G5), or the right tool for the job (Final Cut).

This is not to be confused with me defending Apple's prices. I would love to get a decent price on a G5 and an iPod. Guess it's back to eBay for me ;P

Re:apple fixes the price

[raodin]

More than likely.. I think this has been true for a LONG time all across Apple's product lines. There's never been more than a $50 variance or so on Apple hardware, if you buy it new. Thats why resellers would generally try to sell your on extras. (like free memory, software, etc) Pretty much the only way to get discounts on new Apple hardware is educational/developer discounts.

Re:apple fixes the price

[Matthaeus]

Parent didn't just mean Apple. Retail stores will often advertise their price without discounting it any (the corporate bullshit version is that their prices are already so low that they can't really go any lower). I work retail at one of the companies mentioned in the article and I get asked at least once a week why they do that sort of stuff. Most people just don't notice, and figure that if it's in the circular, it must be cheaper.

In a nutshell, it's corporations exploiting the fact that most sheeple don't think. I say, more power to them.

Re:apple fixes the price

[penguinstorm]

Or Oakley, which regularly refuses to let its retailers discount its products; it occassionally happens, but is almost never advertised and the discount rarely exceeds 20%.

Patagonia lets retailers discount, but they generally have to:
a) notify the rep first
b) not discount stuff that they're told not to discount!

It's really a pretty common practice with high-leverage brands.

FWIW I was told - and I don't work the retail channel, so have no way of confirming this (but not reason not to believe it) that the profit on the CRT iMac (and probably the current eMac) was CDN$20

So while you complain about price gouging on the high end, remember the non-existent profit margins on the low. Keep in mind too that those customers buying the CDN$20 computers ('cause that's what they're worth to me) are the biggest pains - they're going to take forever to make a decision, ask you to explain why your iMac is better than a Dell at $50 less, come back regularly and ask questions which you think should be obvious.

So basically, you make no money off your low-end customers.

So I got no problem with Apple fixing prices and retailers making decent markups - as long as it's backed with reasonable warranties and decent products.

And there's where the iPod fails: 90 days is a joke, and a battery that's not changeable by the user is a travesty of epic proportions. Why anybody's buying this thing, I don't know.

But I want one...my precious.

Re:apple fixes the price

[YouHaveSnail]

From what I understand, Apple does essentially dictate the price. But not just because they can... after all, you'd think that if they could make the same dough per unit while consumers paid less, they'd do it, right? But it's more complicated than that, and there are a few reasons that keeping the price of a particular piece of hardware within a few bucks anywhere you go is attractive to Apple, and believe it or not, beneficial in some ways to customers.

First, many Apple products are high margin items for retailers. As long as that's true, plenty of retailers will carry Apple products, and Apple has a decent shot at increasing both market share and mind share. If Apple lets the price float, retailers' profits on Apple hardware suddenly drop close to zero, and few retailers will continue to carry Apple stuff.

Second, those high margins give Apple a lot of leverage with retailers. Apple needs to ensure that the way its products are presented reflect well on the brand. The "store within a store" concept that you see at CompUSA and others is one example of that. That all costs money. The high margins are Apple's carrot, and the threat of losing Apple authorized reseller status is Apple's stick in the effort to enforce its requirements.

Third, consistant pricing lets consumers buy without worrying that they're missing out on some great deal. If you want an iPod, you go out and buy one at whatever place you like the best or is most convenient for you. It doesn't matter (much) whether you buy at the Apple store or from Amazon or from CompUSA or Best Buy or Circuit City.

Fourth, most people perceive price as an indication of quality. A $300 music player must work better and do more than one that costs $130. (And in the case of the iPod, Apple can back this up: iPod is a better music player than the $130 model in every way other than price.)

Fifth, the market that Apple is clearly targetting with iPod is that segment that doesn't mind paying a premium for a device that works well. These are the same people that might next buy an iMac or a PowerBook or a G5. As much as iPod has been a big hit for Apple, I have to believe that its most important effect has been to introduce Apple to new customers.

What it comes down to is that dropping the margins on iPod gets Apple nothing but cheaper customers, less control over retailers, lower customer perception of quality, and less distribution. Why would they do that?

Re:apple fixes the price

[morganjharvey]

Pretend for just a moment that we were talking about cars.
Now, let's take a BMW sedan that sells for what, about $35,000? Compare it to, say, a Kia sedan that sells for about $20,000. They're both cars, and yet one costs $15,000 more than the other one... And I'm pretty sure that both of them have quite large restrictions on when their dealers can discount certain items.
But why? Both have engines that make you go forward and reverse, steering, etc.. But one's a luxury model. Leather seats, nifty spiffy in-dash computer, all that kind of good stuff. Do you need it? Probably not. Is it something that could make your drive a little more pleasant? Yeah, maybe.
Now, let's look at the iPod. Do you need the nifty Apple-style design, the metalic casing, the laser engraving, etc.? No. Are they fun/nice to have? Yeah, if you're a person who enjoys things like good design. But, the same way with the car, it's not for everybody. These are also usually features that cost extra. But I can guarantee you that apple isn't the only one dictating prices on their mp3 players.

Blame Apple

[EricWright]

AFAIK, Apple is the one keeping prices up. If you look at third party Mac sellers, they will often give you a memory upgrade, HD increase, free accessories, etc., but almost never a price break. My guess would be that Apple exerts similar influence regarding price controls of other product lines, too.

If you want a cheaper ipod, your best bet is most likely going to be eBay.

Manufacturer's doing a deal

[Space cowboy]

I can't believe there isn't some collusion between the retailers and the manufacturers over Xmas, which has an effect on the 'sale' price. Perhaps Apple said 'No'.

I don't think it's morally right to say that a product is 'on sale' unless there's been a reduction in price though - at least in the UK, there must have been an immediately preceding period at which the product was priced higher for it to be marketed as at a 'sale' price...

Simon.

Re:Manufacturer's doing a deal

[Acidic_Diarrhea]

But a sale merely means that objects are being sold. "New sale price" means that I am selling a product for a new price. "Sale price" merely means that the cost of the product in my sale (which I have every day, as the operator of a store - hypothetically speaking) is this price. In fact, "new sale price" doesn't even imply that the price is lower than it was previously.

I think people forget that any time any person or business sells anything, they are having a sale. "Sale" has come to take on the meaning of reduced prices but I don't think people's inability to recall the original meaning of words needs to be legislated.

Re:Manufacturer's doing a deal

[Malc]

Oh come on, don't be so obtuse. We all know that a shop says it's having a sale to indicate that it's selling things at a discount from their normally selling price. In N. America, shops try to play on this with psychology by having continuous sales... they're trying to convince buyers that there's currently a discount and if they don't hurry they will lose out. Of course, as the sales seem to go on all the time, they're not really having a sale. The other sly practice is to rotate the sale through different items from week to week in the hope of catching a consumer by their unawares.

Educational discounts!

[Dixie_Flatline]

Find someone that's willing to buy it for you through their higher education discount. In Canada, a $439 10GB iPod goes for about $379 if you use an educational discount, if I recall correctly.

"For Sale" does not mean "On Sale"

[BonrHanzon]

Just because it's listed in a circular doesn't mean that there's any sale price. We are just conditioned to believe that.
I haven't seen ipods for anything less than MSRP at any B&M either, probably due to the demand being so high.

Capitalism 101

[DoraLives]

Why do stores do this?

To make money.

How often?

As long as the market will bear.

Supply and Demand

[moehoward]

Supply and demand, baby. Deal with it. You don't WANT an iPod competitor. You want an iPod. Don't try to pass the competitors off as equivalent and then bitch about a price differece. Go buy the competitor if you don't like it.

Step 1) Create product
Step 2) Sell it at market price based on supply and demand
Step 3) Profit

It's so easy, even Microsoft can do it!

Re:Supply and Demand

[adrianbaugh]

I fail to see the problem. As the parent said, if you don't like the price Apple wants you to pay, get a different mp3 player. The fact that Apple are forcing you to pay their price through different resellers doesn't seem to me to matter: the iPod is not the only product that can do the job (playing mp3s), and if the price is too high people will buy something else and Apple (and, to some extent, its resellers) will be the losers.
Now, if Apple had an agreement with all the other companies to keep the prices of all mp3 player high, that would be something to be concerned about. But at the end of the day it's Apple's product and they can should be able to charge whatever they like for it. If the product doesn't warrant the price, people won't buy it. If people don't buy it at the higher price, the market will force Apple to lower their prices. It all comes back to Adam Smith and his Invisible Hand.

Apple still can't make enough iPODs

[Osrin]

Your scenario is driven by demand, my local CompUSA is generally out of stock of them, not by choice but because demand is so high.

They're maintaining the price and pushing a huge advertising campaign, it's a good strategy, higher price & lower volume = bigger profit & lower manufacturing cost.

Re:Just too suspicious of Apple

[saddino]

Why should I have to enslave myself to Apple

You shouldn't. Nobody's forcing you, right? If you want to spend the money for the iPod, then do it. If you don't, then, er, don't.

Re:Isn't it Apple?

[CatOne]

Apple can enforce a "Minimum Advertised Price." That is, you cannot advertise the product for less than a certain amount.

Apple cannot control what you actually SELL it for, though.

However, if you're a retailer and you know you have X allocation of iPods, and you can sell them all at full retail, why discount?

"For Sale"

[RandyF]

You've got to remember the oldest trick in the salesman's book: "For Sale" or "On Sale" only refers to the fact that they are selling it, not that it is discounted.

You've also got to remember that Apple is plenty proud of their products and doesn't tend to discount much.

Actually there WAS a discount, but it ended

[coinreturn]

If you shopped the day after Thanksgiving in an Apple store, you got 10% off on an iPod. Sorry you missed it.

Always the case with Apple

[vwjeff]

Apple has always controlled prices on their products even if you do not buy the product directly from Apple. You would think that Apple would sell more iPods if they allowed their stores to control pricing however that could undercut Apple's direct buyer market. They control hardware, software, and prices which can be positive and negative depending on how you view Apple.

Re:Price Limits

[GlassHeart]

I think price fixing is dishonest in all circumstances (unfortunately not illegal in these cases) but to varying degrees. In this case Apple is further in the wrong in my book.

You are very ill-informed. One company setting a price for a product is not "price fixing". Other companies can and do compete against Apple's iPod with lower prices, so go buy those instead if you don't like the prices. Now, if Apple got together with Dell and Rio or whoever else, and conspired to keep prices at a certain level, then that's "price fixing" and it is anti-competitive and illegal. Secondly, if Apple is a monopoly in the market, they can also achieve the results of price fixing without conspiring with another company. A couple of months ago, Apple had about 30-40% of the market in terms of unit, and about 50% in terms of dollars spent. It is not a monopoly.

Similarly, BMW and Benz are not "fixing prices" just because their products are expensive. The are simply luxury goods, like $500 portable music players.

Re:No tax advantage

[tho 1234]

but it can definately help with the balance sheet, and making investors see a strong balance sheet is more important than tax savings

Many of the large computer chains have sale items that come out to be free after mail in rebates. It doesn't take much to realize that its not a viable business model to give away your merchandise- Still, large chain stores do that typically near the end of a quarter, so they can boost the quarterly revenues, boosting stock prices, and later mark off the expense as marketing.

Its similar to what enron did, "sell" your energy to a subsidiary, mark it on the balance sheet as profit, then "buy" it back again and list is as a capital investment, when in reality nothing changed hands.

Yes, many of these business tactics make no sense from a rational point of view, but large corporations are usually more concerned with the perception of strong resuts than reality.