> People are irrational, they value things that don’t necessarily cost more to make

That’s not irrational. It doesn’t cost any more to make a lemon cake than a chocolate cake but a lemon cake is more valuable to me because I don’t like chocolate. Perfectly rational.

This is clearly irrational. Chocolate cake is way better ...

(otherwise good point)

We’d like to see you make a rational, purely logic-based, and objective line of argumentation to justify why you like lemon cake instead of chocolate cake.

A shot at the why, would be that his digestion system might handle lemon better than chocolate, in combination with aquired taste, like the good memory of eating the first lemon cake at his birthday party and so on.

But objectivly proofing it, would require a very complex bio-chemical anaylsis of his digestion and neurological system as well as a deep psychoanalysis. Interesting research probably, but not necessary for determining that objectivly lemon cake has a higher value to him, because he simply likes it more.

Not sure why you're being so demanding?

Acting against what makes you feel better is rational. I don't think that's controversial.

maybe his nervous system randomly prefer it?

If you're Betty Crocker and only 10% of your customers want lemon cake mix but 80% want and buy chocolate...yes, it does cost more to make lemon cake mix, because you buy chocolate ingredients at nine times the volume you do lemon.

If you're a cake mix company that only sells chocolate cake mix, switching up production to include vanilla has expenses all by itself. You now have to manage extra ingredients in your supply chain, schedule time to switch production and all the overhead and downtime in doing so...and your factory-to-retail logistics chain is now both more complicated and split between the two products.

If you retail cake mixes, why would you dedicate capital, storage, and shelf space to something that sells at one ninth the rate?

Etc.

I don’t understand this comment - the premise was the two items cost the same to make.

Given that premise, it’s still possible to value one less than the other.

Given another premise that wasn’t in the comment… we’ll you can still value one less than the other but so what?

I don't see how not liking chocolate could be by any stretch of the imagination "rational".

You can swap it out for any other preference - that's not the important bit.

In continued good-spirited-conversation - if you get sick every time you eat something containing chocolate, I think it's completely rational to form an aversion to it.

I get pimples!

I don't think that valuing something different from the production cost is irrational.

If I never paid more than production cost + some "reasonable" markup I wouldn't be able to buy a lot of things that I enjoy.

A smart business sells things at roughly the price that people value them. A key job of the business is making that cost them less then the selling price.

This is important in another way, too: by offering almost the same thing at two different prices, consumers get to self-select based on how price sensitive they are.

Since some people are willing to pony up significantly more for the black, they can offer the non-black at a slightly lower cost than they otherwise would, which means they can sell MacBooks to a segment of the market that would otherwise consider them out of reach.

Any time virtually the same thing is offered at different prices, you can either complain that it's unfair one target segment has to pay more... or realise that the flip side of the coin is that less price sensitive people subsidise lower costs for more price sensitive people -- which could seem completely fair depending on ideologies.

If you're a hardcore capitalist you see it as a way for the manufacturer to expand their target market without sacrificing profitability. If you're more on the left you see it as taking from the rich and giving it to the poor, without having to resort to coercion.

I have a minor quibble with the term 'subsidizing', since it is still being sold at a profit. It's just a lower margin, because the point of maximal profit in the lower end of a segmented market is necessarily lower than the point of maximal profit in a non-segmented market. It's not going to go into negative profit (and thus enable the customer to buy it "at a loss" for the business, whereby the business is effectively paying part of the cost of the thing on behalf of the customer) as a result of segmentation. So it's neither costing the business profit, nor is it offering the good at a per unit loss. It -is- offering the good at a lower margin than would make sense in an unsegmented market.

You're right, of course. That was a sloppy choice of words on my part.

You might say this is why the iPhone is missing a telephoto lens rather than missing the ultra-wide lens.

Each lens/sensor theoretically costs a very similar amount of manufacturing cost to include, so theoretically if your goal was to give the customer the best value on a cheaper 2-lens phone, you would want to give them the two most used lenses: the normal wide lens and the telephoto lens.

However, Apple gates the more-desired telephoto lens to the Pro model, because it needs to balance the significant price increase with the reality that there isn't much of a manufacturing cost difference between Pro and non-Pro phones.

So, it's a market segmentation based on some desired features.

I disagree with the idea that there's any sort of a positive "flip side" to this strategy from the customers' perspective. This is how profit is maximized. Apple could sell the iPhone 13 Pro for less money and still make a profit, but they know that customers of certain income brackets will pay over a thousand bucks for a phone.

If the iPhone 13 had a telephoto lens instead of the ultra-wide lens, and the ProMotion display, the iPhone 13 wouldn't cost a dime more to manufacture. In this configuration, there would be very little reason for most people to upgrade to the Pro model.

So the theory is basically that if they were to not segment the market this way, the price point of maximal profitability if they offered only one model would be higher than the price point of maximal profitability of the lower segment(s) achieved by segmenting it.

I.e., if the 13 and 13 Pro were nearly identical, yeah, there'd be no reason to upgrade to the pro model, and so Apple, being sensible, would instead offer one model. And the price of that one model would fall somewhere between the 13 and the 13 Pro; meaning that some people who can justify paying for a 13 now would not buy one at all (and you're not extracting as much as you could from those willing to spend more as you could by segmenting it).

By segmenting it, though, the (obviously highly inflated, still super high margin) cost of the 13 is lower, and Apple can put the cost of the 13 Pro higher, because each segment now has its own point of highest profitability (the point where price * number of people who will purchase it at that price is highest; generally the higher the former the lower the latter).

This is also why some graphics cards, for instance, were all made to the higher end specs, and then had chips locked away, damaged, or etc, just to create market segmentation. Even with the fixed margin costs, segmenting the market allows the company to maximize profit, but by doing so it also allows the lower segment to come in at a lower cost than if they were trying to maximize profits with a single segment. It's a "win/win" from an availability/affordability of goods and a corporate profit maximization perspective, even if it feels stupid and unfair to pay extra for the high end card, or be purchasing a 'crippled' card.

>However, Apple gates the more-desired telephoto lens to the Pro model, because it needs to balance the significant price increase with the reality that there isn't much of a manufacturing cost difference between Pro and non-Pro phones.

I believe this choice is because of another much more desired feature: Night Mode™

IIRC It works by overlaying and processing the two images from the ultrawide and wide angle lenses. It's why Night Mode is limited to the wide angle lense, and not available on the ultrawide, as the wide angle lense doesn't provide enough coverage for the ultrawide to produce a Night Mode image.

If Apple included only wide and telephoto, then Night Mode (As currently implemented) would be limited to the telephoto images, which would be a lot less desirable.

> People are irrational, they value things that don’t necessarily cost more to make, and sometimes even the fact that they need to pay extra for it, is in fact why they want it.

I think it would be irrational to value things based on how much they cost to make. The rational thing would be to value something based on utility to you. Why should you care how much it cost to make, unless you have as an alternative the ability to make it yourself?

If I understand you correctly, "my kingdom for a horse" is actually a good economic decision.

The better aphoristic horse-kingdom-related summation is probably For Want Of A Nail:

  For want of a nail the shoe was lost.
  For want of a shoe the horse was lost.
  For want of a horse the rider was lost.
  For want of a rider the message was lost.
  For want of a message the battle was lost.
  For want of a battle the kingdom was lost.
  And all for the want of a horseshoe nail.

Maybe not economical, but definitely rational.

Could also be economical depending on how much you value your life

If a horse is the sole means of surviving an attack, the horse is worth way more than 100 kingdoms because what use is a kingdom to a dead man?

It's an effective business model if you can pull it off. For example a variation thereof made Marcus Licinius Crassus the richest man in Rome[1].

[1] https://en.wikipedia.org/wiki/History_of_firefighting#Rome

Aesthetic benefits, perceived at least, are worth $200 to some people...and that black thing looked cool.

Especially SWEs who work in products w/ zero marginal costs shouldn't complain about market value of a product vs. BOM costs

It’s quite a phenomenon that tech seems culturally committed to a disdain for anything it deems “not real”, such as emotions, aesthetics, law, or philosophy.

…especially if you consider that even product that don’t end as ‘vaporware’ are often immaterial.

They’ll joke about the uselessness of philosophy, then argue the differences between == and ===.

It’s really no surprise from there that they’ve happily embraced “fiat isn’t real” conspiracies and seek to improve that terrible state of affairs with a zoo of inscrutable algorithm-money.

I agree with some of this but totally disagree with the point about aesthetics. Form over function is a major strain of modern design, especially within Apple specifically.

Just as one example, I've been using a work issued macbook for over a year and I still regularly send the screen brightness or volume off the rails because I lightly rested a finger on the stupid touchbar. But hey, it looks cool to use the volume slider!

Yes, „form follows function“ is the version of aesthetics best suited for the enjoyment of people who are unwilling to admit that they can enjoy something without the need to legitimize their emotions with a sciéncy backstory.

More broadly, look at any discussion of web fonts here and you’ll find three suggestions to give everyone „three fonts and be done with it, screw those designers and the strange feelings I get when I see them on their skateboards.“

> People are irrational

People are boundedly rational. The client base purchasing the black enclosure valued it for a few extra hundred USD relative to other things they may choose to spend their funds on.

I mean it’s a little unfair to compare it to the “I am Rich” app because there was a functional difference - a substantial increase in internal storage. 90gb may not seem like much but in 2008, going 160gb->250gb? That was a decent chunk. Worth $200? No. Worth something? Absolutely.

You may say spending $200 extra for a black enclosure is irrational, but then most of the world will say spending $1500+ on any MacBook is itself irrational. Ultimately people have their own reasons and justifications for spending their own money.