iPhone High Prices: Are they ethical?

Anvinraj Sivanandan (2016) has undertaken decomposition analysis element by element of

phone devices offered by Apple (iPhone) and Samsung. His results are controversial. According
to him, differences in terms of labor expenses, cost and quality of physical components between
iPhone and Samsung are approximately inexistent. Although this, iPhone imposes prices several
times higher than Samsung. More importantly, given the above, it seems like a paradox that
iPhone customer demand is much higher than any of its competitors. This rise a serious dilemma
when addressing if iPhone prices are unethical and if customers are fairly treated. In this
argumentative essay, the sustained statement is: It is fair that Apple applies much higher prices
than those of its competitors, although it offers a similar product in terms of physical
characteristics.
The strongest argument that favors Apple decision to imply high prices on iPhone is: Brand
Value. If we refer to economical laws, higher prices of most of products would lead in a
decreased demanded quantity. iPhone customers break this law. This is, because when clients
buy an Apple product they dont buy just a phone, but they buy a worldwide known Brand. This
signifies that together with physical phone, its benefits and facilities, customers profit in terms of
social status, economic power, full range of software services, etc. (Laugesen & Yuan, 2010).
This explains iPhone customers purchase behavior. It is sufficient to mention that Apple accepted
a number of preorders greater than four million for iPhone six, only in the first day of coming
soon lunch (Spence, 2014).
Secondly, it is true that iPhone encompasses material inputs very similar with its biggest
competitors, but its total cost is increased by a lot of hidden and indirect expenses which are not
present in other competitors. To explain this claim, several of these indirect, non- material costs
should be briefly mentioned. Initially, iPhone has invested in a worldwide distribution network,

which helps customer reach. Furthermore, Apple has managed to become a market leader in
terms of technology as a consequence of intensive research and development (R&D)
investments. Finally, iPhone is subject of intensive brand marketing campaigns, which should be
funded. To conclude, in order to be in concordance with accounting, a product price should be
based on the total cost, where all direct and indirect expenses are included. iPhone has similar
direct costs with its competitors, but much higher indirect cost; therefore a higher price.
Lastly, it can be evaluated that marketing strategies followed by Apple in selling its products, and
especially iPhone, have influenced in enhancing its sales even with high prices. For example, one
common marketing strategy used by Apple is setting an extremely high lunch price. After initial
phase of a new product entering in market, the company decrease it price. This forms the illusion
of medium and affordable prices. This is because clients use as a referencing system, iPhone
prices in the past and not actual prices of similar products offered by its competitors.
Furthermore, Apple completes iPhone with a set of services, software updates and mobile apps
which are marketed as unique features of iPhone.
In concluding it may be stated that high iPhone high price is neither a coincidence nor unethical
market behavior. This essay has argued that iPhone high prices are justified mainly for three
reasons, that is: by paying iPhone price, clients purchase not only a physical product, but even its
brand value; its price is a logical consequence of complicated high indirect costs; iPhone has the
privilege to sustain high prices because its customers are not sensible to it, partly because of
smart marketing strategies. iPhone is among the unique products that breaks economic laws, as
this were a kind of tariff attributed to the world in exchange of radical revolution it has offered.
REFERENCES
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Laugesen, J., & Yuan, Y. (2010). John Laugesen. 2010 Ninth International Conference on Mobile
Business / 2010 Ninth Global Mobility Roundtable, 91-99.
Sivanandan, A. (2016, July 3). Samsung Galaxy S7 vs. Apple iPhone 6S Plus: Comparison Of
Specifications, Features, Price. International Business Times.
Spence, E. (2014, November 14). Apple Loop: iPad Sales Crashing, Why Apple Is So Addictive,
iPhone Demand High. Forbes.