1. A more variable pricing policy for customers will increase sales revenue from Apple’s Music Store. According to CNBC, Apple had announced that their online music store known as iTunes had actually exceeded Wal-Mart in becoming the greatest music retailer in the country (CNBC, 2008). By becoming the greatest music retailer in the United States, it is no surprise that this company has considerable market power. Due to this, Apple would be able to increase the price of their songs and albums and would not see a major decline in customers. There is a very large diversity of music, meaning different songs and artists have different demands. Apple choosing to increase the price of the latest/popular songs and decreasing the price of older songs …show more content…
Another potential pricing policy that may increase revenue from Music Store sales would be bundling. Many times, firms use bundling in order to obtain more of a profit from customers with varied product demands. Usually bundling is more lucrative than retailing items separately (Brickley, Smith, & Zimmerman, 2016, p. 251). In Apple’s case, they may decide to price a song at 1.29 each. However, they can sell the entire album which consists of 13 songs for $13.99. At this point, the buyer will debate on whether to purchase songs separately or just purchase the entire album which they’re more likely to do. By purchasing the whole album, the buyer will have saved …show more content…
It is, in fact, Apple’s objective to maximize the revenue it receives from the sales of downloaded music because this also leads consumers to buy other Apple products. There is a huge demand for online music. In order for Apple to receive higher revenue, they must increase the cost of not only their music, but also the iPhone, iPod, etc. According to Apple, “iPhone, Apple Watch & App Store drive revenue growth of 22%.” (Apple, 2015). Apple does not only have to rely on downloaded music for increased revenue. The objective of major record companies is to sell music online. This is how most music companies maximize their own revenue due to the constant evolution of the