How Steve Jobs made high prices seem low

How Steve Jobs made high prices seem low

How Steve Jobs made high prices seem low

Steve Jobs not only created great products. He also managed to charge exorbitant prices for them. While much attention has been given to Jobs's engineering and design prowess, I would like to explore a different part of Steve Jobs’s genius: how he talked about price.

**How did Steve Jobs set prices so high while making those prices seem like a steal in the eyes of customers?** Just as importantly, how can you use the same techniques for your product?

### 1. Position your price against competitors’ prices.

Before announcing the price of the iPhone, Jobs listed the prices that competitors charged.

For example, he stated that a competitor’s mp3 player was ($199) and a competitor’s smartphone was $299. Since the iPhone was the combination of an mp3 player and a smartphone, and the sum of those competitive prices was $498, it made sense that the iPhone should cost $499.

### 2. Use charm prices

Prices ending in 9, 99, or 95 seem less expensive. Apple has always used charm prices.

### 3. Name price after showing the customer benefits, not before.

In each of Steve Jobs’s keynotes, the price was one of the last things he mentioned. Jobs understood how critical it was to make consumers want the product before stating the price.

### 4. Choose a pricing model that ties price to customer value.

Rather than charging $600-$1000 for a new phone, Apple sold the iPhone for $200 when bundled with a 2-year cellular contract. Even though Apple recouped that difference in monthly installments during contract period, consumers perceived phones to be significantly less expensive. In fact, former Microsoft CEO Steve Ballmer credits this “business model innovation” to be one of the most important reasons why Apple outperformed Microsoft in the smartphone category.

The key insight here is that Apple required payment as customers were getting value from their phones, not before. Other companies have used similar strategies. For example, Stripe and PayPal take a percentage of the revenue that their customers earn. Customers pay only when they get value from using Stripe or PayPal.

### 5. Offer multiple tiers

With most major products, Steve Jobs offered higher priced versions with more memory. Regardless of whether those higher tiers sold well, their existence made the basic versions appear less expensive.

### 6. Offer discounts

During back-to-school season, Apple historically has offered discounts, such as a free iPod with the purchase of a laptop. These promotions have helped their sales.

### How you can implement these techniques

If you are an entrepreneur, you may want to implement these pricing techniques. For example, when you email a potential customer, you want that person to be amazed by the value you offer.

SplashPad ( can help you with this. SplashPad helps you write about your product in ways that attract attention and generate sales by providing pre-written messages and sentence recommendations. For example, you can see different ways to talk about your product’s price using the same techniques that Steve Jobs did. Check it out here:

Good luck.