Apple is perhaps the most innovative brand of current times. Well, there’s a reason why it is called THE INNOVATIVE BRAND of the tech industry – it tends to give its customers what they want before they even want it.
There’s a different kind of craze among people when it comes to buying Apple products, especially in India.
The demand for iPhones, Macbooks, AirPods, and several other Apple products in India is increasing day by day more so than ever.
However, have you ever given a thought to why Apple products are so expensive and whether or not they are worth buying?
In India, people have to pay 40% extra for an iPhone than the United States.
This is due to the heavy taxation, customs duties, and middleman’s fees that interfere with the prices of Apple products in India.
But why so?
Let’s look into the depth of the same here in this article:
Due to the lack of local manufacturing units in India, Apple products are comparatively priced on a higher side wherein taxes and customs duty charges are imposed notedly on every other product.
The brand relies on huge third-party networks in India for selling its products, which level ups the cost.
These third-party networks include vendors, distributors, transport agents, and other middlemen ask for a hefty cut of profit in order to maintain the flow cycle.
As iPhone 7 and iPhone SE smartphone contracts for assembly were given to Foxconn and Wistron, these particular devices were considerably affordable as compared to other iPhones.
However, components and Printed Circuit Board Assemblies (PCBAs) are still imported for these phones and various flagship models, adding up to the total cost.
Have you ever thought about why Apple relies on a massive network of retail stores in India for selling its products rather than establishing its own official stores in India? This is due to the Foreign Direct Investment(FDI) policy that says that ‘’any brand has to source 30 percent of its components locally if it wants to open manufacturing units in the country.’’
Meaning, Apple will have to agree with this policy to set up a manufacturing unit of its own in the country.
Well, this is something that can be dealt with, especially when it’s iPhone that we are talking about!
Goods & Services Tax
Effective from 1st April 2020, the rate of GST on smartphones and accessories was increased to 18% from 12%, which further caused a hike of 5% on the rates of Apple products in India.
Value Added Tax (VAT) is applied to iPhone accessories such as earphones and chargers as they fall under different categories. A total of 12.5% of VAT is imposed on these items.
As per the central government tax regulation, the taxes levied are different for every state in India. And this is why the rates of Apple products especially iPhones vary across different regions of India.
Fluctuation in currency
Other Android smartphone companies also import their devices in India, but they are not that costly.
Apple is not the only company that imports its devices in India, there are several Android smartphone companies that are doing the same thing. But their retailing price is not as costly as Apple’s. This is due to the foreign exchange loss that occurs.
What is a foreign exchange loss and how is it related to Apple products?
When a company buys or sells goods and services in a foreign currency, the currency fluctuates relative to its home currency and that is when a foreign exchange loss occurs.
So a price of a particular commodity largely depends on the foreign exchange losses that occur. In most cases, smartphone companies absorb these losses and don’t interfere with the prices.
But, with Apple, that’s not the deal. The brand follows a strict policy of maintaining margins for all of its products.
India imports a predetermined customs duty on every other product. As for the Apple products, the total amount of duties implied is 11.43% which counts shipping and handling charges along.
The government recently has also increased the import duty on PCBA (printed circuit board assembly) from 10%to 20%. As for the chargers, PCBA has been increased from 15 percent to 20 percent, which also carries forward on the retail price.
Why are Apple products so valuable?
Innovation is the key to power. As long as Apple continues to expand its growth in bringing new innovations to its devices, there will always be a heightened demand for its products and services.
What value does Apple create?
Apple has successfully convinced its customers that its products are worth more fulfilling compared to its competitors. All of Apple products’ value is being created through voluntary trade with customers.
Are Apple products better?
What Apple offers for the value it asks for its products is simply commendable. Customers value the user experience and ecosystem that Apple products come equipped within.
I hope you’re now clear on why Apple products are so heavily priced. From security and privacy-focused features to an intuitive ecosystem, Apple has got everything to fascinate users to stick to its unrivaled user experience.
So what do you think are Apple products worthy enough of their price? If you ask me, I would definitely nod to the previous question!