Danish Kapoor
Danish Kapoor

The rise in prices of Apple services is also a message: package yourself

Apple raised the prices of several of its services this week. Apple TV+, Apple Arcade and all AppleOne packages have become more expensive, and in the United States so has a service that we do not have in Spain: Apple News+.

Although this increase can be understood as another movement to make its services profitable and to consolidate a division that has already become the second largest for the company in terms of income, only behind the iPhone… it has an additional reading.

Especially if we look at the percentages of each increase.

Increases that are not distributed equally

Apple already raised the prices of almost all of its services just a year ago, in October 2022. The skyrocketing inflation during that year was understood as the main culprit, but even then a certain trend was seen that is consolidated now: Apple increasingly ‘punishes’ those who subscribe to individual services instead of opting for an Apple One planwhich bundles those services.

Let’s look at the prices that Apple services had until summer 2022 and the current ones, with the percentage increase for each one.

In relative terms, Apple One increases less the higher its price. The individual plan has risen 33% in this year and a half, but the Premier, which is shared with the entire family, has risen “only” 21%.

On the other hand, individual services have increased much more, except Apple Music, which lives in a different condition: it does not lead its sector. That’s a Spotify thing, with many more users, both in total and paying only. At least until Apple gave its user numbers for the last time.

In the rest of the cases, where Apple has more scope for increases, either because it does not have a large technology company as a rival or because it has something that differentiates it from the rest (such as integration with the Apple Watch on other screens to Fitness+).

It seems that With some of its services, Apple’s intention is not so much to focus on them as individual products, but rather as value propositions for their packages.. Something similar to what happens with Amazon and Prime Video: it is not so oriented towards being contracted by itself, as is the case with Netflix or HBO Max, but rather towards increasing the perceived value of the Amazon Prime subscription, which goes far beyond the free shipping.

The bundling of services has another consequence that companies greatly desire: provide a brake on instinctive cancellation. Let’s make a simile with the operators. The last decade saw the rise of convergence for telecoms, and not only by bringing together their services (fiber, mobile, television), but also incorporating third-party services (legal advice, health insurance, personal cloud…).

The intention was clear: to add value to the contract and earn an additional euro, but also to make portability and cancellation difficult. For someone who has their services contracted independently, it is very easy to detect a better mobile rate and do the portability in two days. On the other hand, for someone with a package of seven services it involves many more calculations and procedures, because they will often have to reconsider what interests them most about their current operator and its competitors.

In the case of Apple services, it is very easy for an Apple Music user to go to Spotify because they get tired of a desktop application that works poorly macOS yes macOS too, but if that user is linked to Apple One Premier, the transition does not ends in two clicks and rethink playlistsbut to see which services you cancel, which ones you keep, how they are in price and if an alternative will be better.

And hence, in one more company, the interest in bundling: It is not only a way to increase recurring monthly income, but also to make it difficult to drop out. without having to resort to dark patterns or similar tricks.

And in a company like Apple, which increasingly depends more on its Services division (in the last presentation of results they were 26% of its income), and it is also recurring income, not seasonal like hardware… we can expect reinforced efforts in this regard for the coming times. And the Vision Pro are about to drop.

PS: Apple has been quick to raise service prices twice in a year, but not so quick to increase iCloud storage space, despite the fact that the GB becomes cheaper every year.

Featured image | TechGIndia with Midjourney.

Danish Kapoor