Setting the price of a product is a crucial task in the launch of a product.

Apple uses a
premium pricing strategy for iPhones and they have a good, better, best lineup.  In the
company’s view, the iPhones are superior to competitor offerings, and customers prefer
the Apple phones.  For that, customers are willing to pay a premium. Recognizing that
some customers are more price-sensitive than others, the company offers a range of
iPhone generations, and within each generation a range of models.
According to Macworld, Apple maintains its high-priced products’ popularity by only
offering retailers such as Walmart or Best Buy a marginal wholesale discount. This
small percentage in savings isn’t enough of a profit margin for retailers to offer big
discounts on Apple’s products. Therefore, customers end up paying a price close to the
manufacturer’s suggested retail price. However, a retailer could give up this small profit
margin and offer products at a discount to attract more customers. Apple prevents this
scenario by offering monetary incentives to retailers to sell goods at the MAPs fixed by
the company.
This pricing strategy is effective, as it prevents retailers from competing directly with
Apple’s own stores. It also ensures that one reseller doesn’t have an advantage over
another. Apple is thereby able to keep its distribution channels clean while making more
money on its direct sales. Macworld also noted that iPhones weren’t under a strict
pricing model. They are sold at a lower price with wireless contract deals, as retailers
gain a commission from carriers.
 Apple’s cheapest product prices are usually midrange, but the products’ features
ensure a high-quality user experience. The hardware and user interface are designed to
provide a lot of value for the price, keeping profits high. However, a company can only
charge a premium price as long as it has a competitive advantage, and analysts believe
Apple is on the way to losing its “aspirational” status.