Marco Tabini tries to explain, in part, how Apple sets its prices. The title is a little inaccurate, in my opinion. It’s not so much to ask how does Apple set its prices but how does it maintain a consistent price across retailers. Harder to put in a title, I suppose, but still important to understand. I’ll Marco’s explanation on how this is done but it isn’t a surprise to me (and other Apple fans) nor is it uncommon. But the 3rd and 2nd to last paragraphs (respectively) are what I’d want to call attention to:

The cumulative effect of Apple’s pricing policy on consumers is hard to nail down. On one hand, we’re deprived of the positive effects that price competition normally produces in a free market. The familiar phenomenon that Apple products tend to be more expensive than their competitors in the same market space doesn’t just happen: You can easily find an inexpensive laptop, but it’s much harder to come across an inexpensive Apple laptop.

On the other hand, it’s also hard to come across an inferior Apple laptop—and this is true of every other product that leaves the company’s manufacturing facilities: Generous profit margins and a tight control over its distribution channels have enabled Cupertino to produce higher-quality goods at prices that only modestly exceed those of rival products. Thus, arguably, consumers enjoy a better overall experience, dollar for dollar, in the long term.

Consistent prices helps maintain higher than average margins. Those margins allow Apple better to build quality products. That quality translates to higher value. That value keeps prices and, therefore, margins high. And the cycle repeats itself.

via The Loop