{"id":11393,"date":"2011-02-24T07:00:01","date_gmt":"2011-02-24T07:00:01","guid":{"rendered":"https:\/\/blogs.msdn.microsoft.com\/oldnewthing\/2011\/02\/24\/iphone-pricing-as-economic-experiment\/"},"modified":"2011-02-24T07:00:01","modified_gmt":"2011-02-24T07:00:01","slug":"iphone-pricing-as-economic-experiment","status":"publish","type":"post","link":"https:\/\/devblogs.microsoft.com\/oldnewthing\/20110224-01\/?p=11393","title":{"rendered":"iPhone pricing as economic experiment"},"content":{"rendered":"<p>Back in 2005, <a href=\"http:\/\/www.slate.com\/id\/2132071\/\"> <i>Slate<\/i>&#8216;s Tim Harford wondered why Microsoft didn&#8217;t raise the introductory price of Xbox&nbsp;360 game consoles<\/a>. With the price set at $300, lines were long and shortages were many. <a href=\"http:\/\/www.slate.com\/id\/2132988\/\"> Harford&#8217;s readers came up with their own theories<\/a> for resisting the laws of supply and demand and holding to a fixed price.\n The Xbox&nbsp;360 is hardly unique in this respect. When there&#8217;s a hot product, manufacturers hold to the original price and let the lines grow, the shortages fester, and the customers get more frustrated. Think <i>Tickle Me Elmo<\/i> or <i>Cabbage Patch Kids<\/i>. Even though from an economic-theoretical standpoint, a product that has sold out with unmet demand is a product whose price was set too low.<\/p>\n<p> With the iPhone, Apple unwittingly ran the experiment that Harford proposed. <a href=\"http:\/\/blogs.msdn.com\/oldnewthing\/archive\/2007\/11\/23\/6475512.aspx\"> There were lines<\/a>, but by some reports, <a href=\"http:\/\/www.switched.com\/2007\/06\/28\/iphone-this-ain-t-no-ps3-launch\/\"> the lines weren&#8217;t all that bad<\/a>. After the initial demand subsided, Apple did what the economists say they should have done: They lowered the price. And the people who bought the phones at the higher price complained (forcing Apple to offer a store credit) and <a href=\"http:\/\/techdirt.com\/articles\/20070930\/000359.shtml\"> one of them even sued<\/a>. <a href=\"http:\/\/www.slate.com\/id\/2174391\/\"> <i>Slate<\/i>&#8216;s Daniel Gross opines on the lessons learned<\/a>. <\/p>\n","protected":false},"excerpt":{"rendered":"<p>Back in 2005, Slate&#8216;s Tim Harford wondered why Microsoft didn&#8217;t raise the introductory price of Xbox&nbsp;360 game consoles. With the price set at $300, lines were long and shortages were many. Harford&#8217;s readers came up with their own theories for resisting the laws of supply and demand and holding to a fixed price. The Xbox&nbsp;360 [&hellip;]<\/p>\n","protected":false},"author":1069,"featured_media":111744,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[1],"tags":[103],"class_list":["post-11393","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-oldnewthing","tag-non-computer"],"acf":[],"blog_post_summary":"<p>Back in 2005, Slate&#8216;s Tim Harford wondered why Microsoft didn&#8217;t raise the introductory price of Xbox&nbsp;360 game consoles. With the price set at $300, lines were long and shortages were many. Harford&#8217;s readers came up with their own theories for resisting the laws of supply and demand and holding to a fixed price. The Xbox&nbsp;360 [&hellip;]<\/p>\n","_links":{"self":[{"href":"https:\/\/devblogs.microsoft.com\/oldnewthing\/wp-json\/wp\/v2\/posts\/11393","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/devblogs.microsoft.com\/oldnewthing\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/devblogs.microsoft.com\/oldnewthing\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/devblogs.microsoft.com\/oldnewthing\/wp-json\/wp\/v2\/users\/1069"}],"replies":[{"embeddable":true,"href":"https:\/\/devblogs.microsoft.com\/oldnewthing\/wp-json\/wp\/v2\/comments?post=11393"}],"version-history":[{"count":0,"href":"https:\/\/devblogs.microsoft.com\/oldnewthing\/wp-json\/wp\/v2\/posts\/11393\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/devblogs.microsoft.com\/oldnewthing\/wp-json\/wp\/v2\/media\/111744"}],"wp:attachment":[{"href":"https:\/\/devblogs.microsoft.com\/oldnewthing\/wp-json\/wp\/v2\/media?parent=11393"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/devblogs.microsoft.com\/oldnewthing\/wp-json\/wp\/v2\/categories?post=11393"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/devblogs.microsoft.com\/oldnewthing\/wp-json\/wp\/v2\/tags?post=11393"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}