Last week, Apple announced the new Mac Pro, a large, powerful computer that will cost $5,999 for an eight-core processor and 32 GB of RAM. At its most powerful, the computer will include a 28-core processor, 1.5 TB of RAM, and multiple graphics cards. Opinions vary on what this top-end configuration will cost, but the number is likely around $40,000.
If that price makes your eyes water–it certainly makes my eyes water–you’re not the target customer. I’ll never own one, but I assume that certain animation studios will regard the Mac Pro as a sensible, productivity-enhancing purchase. As Apple announced the product, you could see the audience simultaneously salivating and bracing themselves for the impending sticker shock. They were neither surprised nor angry at the high price.
You could hear the shift in audience attitude, though, during the announcement of the matching monitor. The Pro Display XDR will cost $4,999. It certainly looks nice: super bright, accurate colors, outstanding viewing angles, high dynamic range, and a resolution of 6016 by 3384 pixels. Then Apple revealed that the stand, the piece of metal that holds the monitor at a consistent height and angle, will be sold separately for $999. The audience rumbled in discontent as the presenter hurried through the remaining slides.
In 2010, in the wake of most major airlines adding baggage fees, the MIT Sloan School of Management posted an article examining the situations in which customers find “sold separately” distasteful to help businesses make educated decisions on when to engage in the practice. The article is long, so the authors included a helpful flow chart that I’ve taken the liberty of providing answers for.
Q: Is the consumer already committed to making a purchase from you?
A: No, many companies make high-quality monitors, and all of those monitors will work with the Mac Pro.
Q: Given that the consumer will engage in comparison shopping, do competitors partition prices?
A: No, most high-quality monitors include the stand in the box.
Q: Is the price of the component small relative to the price of other components?
A: No, the stand adds 20% to the price of the monitor.
Q: Do consumers react negatively to the partitioned component?
A: Yes, consumer sentiment that is a stand is a basic, necessary component, akin to wheels on a car or handles on a dresser.
Recommendation: Keep things simple by combining prices across components.
Intuitively, I’m shocked to see Apple miss such an obvious conclusion. Customers would have understood—maybe not approved, but understood—if Apple had said, “The Mac Pro is heavy and comes in a large, padded box, so one-day shipping costs $350. Also, the premium components mean that the extended warranty costs $1200.” But to nickel-and-dime customers for a standard accessory on a premium product? Whatever internal business logic Apple was following, they failed to consider human psychology. Price the monitor at $5,999, and include the stand.