Pricing the iPad mini

Earlier today, Apple introduced the iPad mini with a starting price of $329. Right away, observers have pointed out that the iPad mini is $130 more than Amazon’s Kindle Fire HD and Barnes and Noble’s NOOK HD.

It’s fair to compare those devices, and even to assume they’re Apple’s target, but I don’t think that’s the whole story behind the mini’s price. Here are a few thoughts on why Apple chose that seemingly oddball price.

The Frugal Shopper

Apple isn’t competing with the Fire so much as making a more accessible iPad. At five hundred dollars, the iPad is expensive and likely out of reach for many. Now that the iPad mini is priced at $329, the frugal consumer’s choice changes from “spend a lot of money on an iPad or buy one of these less expensive tablets” to “buy a tablet.” I suspect many hold-outs will become iPad owners over the next few months.

Why $329?

That price seems odd. It’s the “29” that bothers me. When 9to5 Mac suggested $329, I was sure they were wrong. Why not $299, $349 or even $399?

Well, $299 is right out because that’s the cost of the entry-level iPod touch, and $399 is too close to $499, the cost of the mini’s full-sized sibling. I guessed that it would cost $349 (Apple likes beefy profit margins), but Phil Schiller surprised me today by announcing that the entry-level iPad mini costs $329. When you think about it, it’s the right price. Apple could have charged $349, but it chose $329. Because it can.

Why then would that shopper choose an iPad instead of a Fire or a NOOK? The simple answer is, “because it’s an iPad.” Is the device’s appeal, reputation and prestige worth $130? We’ll have to wait until Apple’s 2013 Q1 earnings report to find out.

3 Comments

  1. I think that while the iPad mini will certainly sell like hot cakes, the Nexus 7 tablet at $199 is a better buy. The Nook Tablet and the Kindle HD are not in the same device category. Even though they are both 7 inch tablets, they are too locked down. As such, a better comparison would have been the Nexus 7. That said, while Apple dissed the 7 yesterday due to its slightly smaller screen, it does hav better resolution than the Mini and is cheaper.

    1. @Steve Best, Nexus 7 equivalent (16GB) is $249, not $199. The 199 version has only 8GB memory, so not a direct comparison. So at $80 difference, I strongly disagree Nexus 7 is a better buy. I played with it, a friend has it – the screen just feels cramped after a while. 7” widescreen is too small.

  2. Assuming the target of the new iPad mini was the Nexus 7, Kindle Fire, or Nook was not something I was prepared to do either. I read all the reviews yesterday that thought Apple had “over-priced” the iPad mini. All I kept thinking was how did they arrive at that conclusion? I think David is correct. The pricing of the iPad mini was done solely to address Apple’s line-up of iPads and make it more affordable for those that want an”iPad”. When you look at all the features of the iPad mini, including all the Apple ecosystem I can see many folks that didn’t pull the trigger and buy a 3rd Generation iPad opting for the iPad mini. Just say…

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