Monday, August 18, 2008
Price = Quality?
What separates a luxury product from a generic product? Is it the product's quality? Or is it strictly the price that makes the product appear exclusive?
Cha-Ching! Recently, the "I Am Rich" Iphone application sold for $999 on Apple's App Store. Very expensive, considering Iphone applications normally retail between one to five dollars. The "I Am Rich's" features are extremely basic and trivial. I would actually be surprised if they turned a grin on Richie-Richie's face. Despite the exorbitant price, eight people purchased they "I Am Rich" application before Apple removed it from the App Store.
What can we learn from the "I Am Rich" application? Well, that a niche of Iphone users are interested in exclusivity more than price and function.
The Wall Street Journal reports that Apple's Iphone App Store is generating $1 million in daily sales and Steve Jobs expects annual revenues to reach a billion dollars in a few years. As new applications are listed on the App Store and products enter the marketplace, it's important to realize that price may be the only difference in the actual product, which can create the allusion of luxury and exclusivity.