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Companies rated highly on many Elements of Value from at least half of US consumers surveyed by Bain & Company are able to charge a price premium for their products, relative to companies delivering on fewer elements. In smartphones, for example, Apple delivers on more elements than Samsung or LG. We set all device features to be equal across the three brands, then adjusted prices up and down for the brands until the predicted market share was equal. As a result, at equal market share with Samsung, Apple can charge a premium of $340 more than Samsung. At equal share with LG, Apple can charge a whopping $518 premium. Indeed, the analysis supports Apple’s strategy to set a high price for the iPhone X, despite pundits initially saying it was a mistake.
Jamie Cleghorn is a partner with Bain & Company’s Customer Strategy & Marketing practice.
Elements of Value® is a registered trademark of Bain & Company, Inc.
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