Apple just released its latest product, the Apple Vision Pro, and from the outside looking in, the launch was a success. Which is strange considering that, according to Facebook CEO Mark Zuckerberg, the Apple Vision Pro is an inferior product to their Meta Quest 2 VR system...and 7x the cost!
So today I want to break down the launch, what Apple did, and why it worked.
But to understand Apple's positioning, it helps to take a look at Tesla.
The Launch of the Tesla Roadster
Tesla launched their first vehicle -- the Tesla Roadster -- in 2008. The base price? $98,950.
Comparatively, the average price of a car at that time was only $23,429.
This made the Tesla product $75,521 more expensive than the average car at the time.
Percentage-wise, that's 322% more expensive, or 4x the average price of a car in 2008.
Let me highlight the important thing here:
The Tesla Roadster was 4x more expensive than the average competitor (make a note of this for later please).
The Launch of the Apple Vision Pro
Now, let's look at the launch of the Apple Vision Pro.
I see some similarities…
Like the Tesla Roadster, it's not the first virtual reality headset.
("there are many like it, but this one is mine")
Like the Tesla Roadster, it's unabashedly class-ist and does NOT care about the majority of the market.
And like the Tesla Roadster, the pricing is integral to the product.
Case in point:
Take a look at the Meta Quest 2 (originally titled the Oculus Quest 2, but later rebranded), which was released in 2020 for $499.
Fast forward to 2023, Facebook (Meta!) releases the Meta Quest 3 for $499.
Then in comes Sony. To compete in the VR market, Sony releases the Sony PSVR 2 with a price tag of $549.99.
There are other VR products, and they all fall around the same price point.
Apple's Pricing Strategy
Then in walks Apple, hours late to the party and probably a little drunk, and says hold my beer.
The Apple Vision Pro releases for a whopping $3,499.
That's $3,000 more expensive than the Meta Quest 3. Percentage-wise, it's a 601.2% increase in price…
And by multiple, the Apple Vision Pro is 7x the price of the average consumer VR product in this category.
Take that in for a second:
7x more expensive than the competition.
Apple Vision Pro Pricing Strategy (Mass Adoption vs. Status)
What's the point?
Entrepreneurs, creators, and companies often look at pricing in terms of 'mass adoption.'
What's the sweet spot to get the most number of people to buy the most number of products to make the most amount of money?
They compete on the feature set.
It works. That's why they do it.
But when a market is saturated, this pricing strategy ends up being a race to the bottom.
Good for the budget buyer...but for the brand trying to stand out, it becomes increasingly difficult to communicate a message around why your product is 5% to 15% more expensive compared to the competition.
For the customer, that requires brainpower, time, and effort. I have to look at the specs, I have to read reviews, and I have to convince myself the "premium brand" is worth paying more when the "dup" is just as good for half the price.
Apple's Status Pricing
But Tesla and Apple -- they take the ULTRA PREMIUM pricing approach.
In other words: they're playing the 'status' game.
There's no comparing the Tesla Roadster or the Apple Vision Pro to anything else, because you literally can't compare them to anything -- and that has nothing to do with the feature set. It has everything to do with price.
When playing the game of status, the price IS the product.
The product features, the packaging, the polish…all of that reinforces the story that the price is already telling you before you learn anything more about the product.
Here's what Musk said about the original Tesla Roadster:
To break the mold, to establish a beachhead in the market, Tesla HAD to play the 'status' game instead of the 'price to value' game. They started at the top of the market, intentionally excluding 99% of the population.
Yes, this gave them margin, but more importantly, it let people know: this is only for the cool kids.
And you see where they are now.
As for Apple? Well, it seems to be paying off...
Apple Vision Pro Launch Summary (and things to think about)
In the game of STATUS, the price IS the product.
So when you're thinking about pricing, maybe consider an APPLE or Tesla approach.
Instead of competing on an extra feature, why not go 7x higher than your average competitor and see what happens?
Yes, it raises the stakes. And, yes, you'll have to level up your messaging, packaging, and the product itself (although apparently not according to Zuck)...
…but at a 7x multiple, maybe there's margin (and meaning) in doing the extra work to be in a category of one.