General Question

2davidc8's avatar

Apple's iPad costs the same everywhere; why isn't this price fixing and a violation of anti-trust laws?

Asked by 2davidc8 (4170 points ) September 14th, 2012

The fact that you cannot find this product at a discount anywhere suggests to me that Apple won’t allow it. Isn’t this price fixing?

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19 Answers

rooeytoo's avatar

In Australia the assorted apple resellers often have specials or sales. And there are some stores that will give a discount if you pay cash or if you belong to the local MUG. So I assume it is a suggested retail price and it is up to the individual dealers how much of a margin they want.

LuckyGuy's avatar

Why would anyone sell it at a discount when people are lining up to buy it? When the initial demand cools and there are more complaints about the different connector you will see discounted pricing.

Seek's avatar

^ Agreed.
There is a “maxumum suggested retail price”. Retailers can discount whatever they want after they pay Apple for their share.

But, there’s simply no good reason to do it. Heck, it took almost two years for the first discount on the Nook Tablet to show up, and that’s only $15 off, I think.

tom_g's avatar

Retailers only get a 3% discount off the price of the iPad. So, they have very little to work with.

tedd's avatar

It’s not price fixing when you set the price of your product alone. It’s price fixing if Apple, Samsung, Microsoft, whoever.. all got together and all set the price of their equivalent pads to be X dollars.

No retailer is going to be stupid enough to try and sell the iPad for more or less than suggested retail because if they sold it for more —no one would buy from them… if they sold it for less —they would lose money… and Apple wouldn’t sell them their next huge product.

JLeslie's avatar

@tom_g I have never heard of such a thing. Even the way it is worded is odd, 3% discount. Retailers usually buy products at wholesale, not at a discount. I’m talking about the terminology right now. Although, I have never worked in the small electronics or computer end of retailing so things might obviously be different there. I would assume that if they do this 3% discount, the retailer doesn’t have to buy the goods up front? Or, that they can always return the product to Apple if it doesn’t sell. That they are more like dealers? I am not saying your information is wrong, just surprising. It shouldn’t be very hard to verify such thngs when I worked retail the cost/wholesale price of an item was easily seen on a computer screen for any manager who was evaluating numbers for their department.

There are businesses that run with very close margins. Grocery stores are known to sell products only slightly above cost, so it isn’t like all retail doubles the cost to get a retail price.

Anyway, interesting article. I had no idea that business ran like that.

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tedd's avatar

@JLeslie My experience working in a computer store (microcenter) was that most big box items (computers, ipads, ipods, etc) sell at almost no profit to the store. The stores make money on accessories like cables. The store might buy your USB cord for 50 cents, but then sell it to you for $10.

JLeslie's avatar

@tedd I see. Interesting.

CWOTUS's avatar

Contrary to the belief of at least one self-proclaimed expert in the thread, I believe that if a retailer sells Apple products for less than Apple’s suggested retail price and then Apple retaliated by not selling them future products, that would be fully and quickly actionable as an illegal restraint of trade.

But I don’t want to start another argument outside my area of expertise.

JLeslie's avatar

@CWOTUS I don’t know. Some vendors definitely only sell their products to only certain retailers, sometimes with agreements that they won’t sell to other retailers. I don’t know if they also try to control the price? Some vendors agree not to sell directly to consumers at a discounted price, which would basically undercut the retailers. I really am not sure of the specufic laws, it would be interesting to find out. It might vary by state? Laws like loss leaders vary by state.

tedd's avatar

@CWOTUS I dunno if they’d win that in court though. Moreover, why go through the hassle and fight with Apple? They’ve got deep pockets, even if they’re in the wrong they could make pretty much any retailers life a living hell.

And if you’re referring to me, I’m definitely not an expert on the subject. Though I would say I have a decent sum of knowledge on it. The store experiences are 100% factual, but the rest is just what I’ve put together from reading the news, watching the stocks/business practices of Apple, and conjecturing them together. In general, it doesn’t seem to be a good plan to make Apple angry.

SuperMouse's avatar

It seems like economics 101 to me. A supplier will ask the maximum price the market will bear. If the market couldn’t bear the price, Apple would have to lower it in order to sell their products.

JLeslie's avatar

@SuperMouse I wish people would stop lining up so fast. It seems to me very few people really put thought into the money they spend.

jaytkay's avatar

I believe they cannot control the reseller’s price to the end user, but manufacturers can enforce a minimum advertised price (MAP).

Violate the MAP, lose your dealership.

It was a way to make a brand more valuable to the resellers, by preventing a race to the bottom.

It’s been a while since I worked for a retailer (it was a pretty big computer reseller), and I wasn’t in that end of the business, but MAP was a big deal.

2davidc8's avatar

Thank you for your opinions, jellies! I do agree with @CWOTUS that if Apple retaliated against a retailer by not selling them future products, that would be fully and quickly actionable as an illegal restraint of trade. However, it seems to me that Apple can effectively enforce a MAP (@jaytkay), by leaving them with only a very thin profit margin to work with.
@tedd An individual retailer might not be able to take on Apple, who has “deep pockets”, as you said, but the Federal government or the state attorneys general could.

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tedd's avatar

@2davidc8 True enough, but why would they? It’s a super successful business, and there’s nothing illegal about ensuring your products sell for a specific price. Like I pointed out earlier, it only becomes a price-fixing monopoly when you’re conspiring with your business-adversaries to set the prices of equivalent products to be the same, and artificially high at that.

2davidc8's avatar

@tedd Thank you for your excellent answer to my original question.

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