Itunes Essay

498 Words2 Pages
Chapter 7 Case Assignment “iTunes Music Pricing” N. Davis 1. Variable pricing allows the record companies to charge for songs and other products based on the artist’s popularity and for newer material. Apple’s music store will likely increase their sales revenue with variable pricing because there is a greater demand for the newer songs and the more music by the most popular artists. Customers are more willing to pay the difference in cost to have the music that they want. Variable pricing will increase Apple’s revenue by increasing the number of customers to their website and the amount of profit that will be realized from each song download. 2. Another pricing policy that the Apple store could consider is price bundling. The Apple store could “bundle” songs by a particular artist and sell the package for a set price. The “bundle” could include the artist’s next song with a remix and an older song or a previously unreleased song. Apple could also consider price discrimination-they could charge more for an artist’s popularity. Apple could consider cost-plus pricing, which would determine a mark-up price according to the total average cost of the song and doesn’t calculate demand. 3. The risks that Apple would face for implementing a more sophisticated pricing strategy would be customers not willing to spend as much on downloads and the record companies not making their catalogs available to Apple but only putting them on specialized websites. A more sophisticated pricing scheme for music could lower demand and customers would find downloaded music. 4. Apple’s pricing objective is to maximize the revenue from the iTunes music store sales and from the sales of iPod related services; both of these things increased 672% from fiscal years 2003 to 2004. (Apple Computer, Inc, 2004) The objective of the record companies is to profit from the sale of

More about Itunes Essay

Open Document