It was subtle. A bit like the breeze taking a leisurely stroll through an Amazonian jungle, rustling a few leaves along the way. But those who were in the hall where Nokia unveiled its Lumia 920, 820 and 620 devices for the Indian market, sensed and felt it.
A quiet sigh that went up the moment the price of the flagship Lumia 920 was announced.
At approximately $693, the Lumia 920 entered the Indian market at a price that was above of the Samsung Galaxy SIII and Galaxy Note 2, although it was well below that of the iPhone 5. Nevertheless, within moments of the announcement of the price, there were whispers going around “Is it better than the Note?” “Why won’t anyone buy an iPhone for that price?” and of course, the inevitable “Hey, it’s good, but wait for three months when a hundred dollars drop off the price. It always happens.”
Why Premium Pricing?
Which made us ponder something – why on earth do SO many tech companies release their flagship products at prices that tend to be on the higher side? By all accounts, even the first BB 10 handsets are going to cost a fair bit, and one of the biggest challenges faced by Windows 8 is that most of the so-called flagship devices that have been promoted as being great for it come with price tags.
So what IS it with pricing your flagship at a level that not too many can afford it?
Yes, we know there will be those who will point out the examples of the iPhone and the Galaxy S / Note series as prime examples of devices that came with high prices and did well. Our answer to that would be simply to count out all the devices that came with high price tags and came a cropper – do NOT get us started, it is a VERY long list and features a number of companies that claim to be staggering high brand value.
There will be also those who will of course bluster that a flagship HAS to be premium-priced. After all, it is the best performing device of a company, isn’t it, with the best in terms of hardware and software?Well, our answer to that is – show us the rule book that says so. Three examples suffice:
- Apple might be known for the premium pricing of the iPhone series, but it is very notable that when it launched the iPad, it did not slap a hefty price tag on it – in some markets, the iPad indeed was for a while the most affordable 10-inch tablet (all right, 9.7 inch, if you are the hair-splitting type) at $499, even while the likes of Samsung and Motorola came out with much more expensive variants. Would the tablet have become such a rage if it had cost more? We are not too sure.
- Interestingly, another example of pricing your flagship at a less than premium price comes from the tablet that has been giving the iPad the stiffest battle – the Kindle Fire. Amazon priced it at $199 – it could have gone for a higher price but opted for a more affordable one.
- Google could have gone the premium pricing way with both its Nexus 4 phone and Nexus 7 tablet. Instead it priced the former at $299, the latter at $199 – even taken together that is less than the price of the fourth generation iPad. Both are flagships for the big G!
Take a look at the sales records – devices that are priced at a more accessible/mainstream level tend to sell more than ultra-high priced ones. Yes, you might be able to get away with a crazy price tag if you are able to combine a lot of style with great hardware and software and – most important of all – are able to sell the concept to your consumer.
And here is the REALLY tough part – if someone already has managed to do so, the chances that the consumer will get swayed by a similar demand from another brand selling the same product are significantly low. There is only so much influence-able mindspace out there. And those who have already been influenced by another brand will take more than a sleek presentation to change their minds – on the other hand, they might just be tempted to experiment if you do not stick a sky-high price tag to your offering?
The PlayBook flew off the shelves in India when its price was slashed by almost fifty per cent last year. Nokia’s Lumia range in India took off with the introduction, not of the expensive 800, but the low cost 610 and 510 handsets. BlackBerry’s market share in India shot up not with the high-profile Bold series but the more affordable and solid-performing Curve. Even Android did not become the most popular smartphone OS on the back of a few expensive handsets but a lot of relatively inexpensive ones.
And yet. And yet.
Companies continue to believe that customers will get swayed by a stack of impressive specifications packed with an equally hefty price tag. All this when common sense – and commercial examples – indicate that while a few premium-priced product will get people to queue up for them, most will come a cropper. Yes, they will grab a lot of media space and launch a thousand reviews, but that done, most will not really rock the sales charts.
Money does not grow on trees. At least not for the vast majority of consumers out in the market to buy a new device. Or does it?
Perhaps tech companies know something we don’t.