Raising Prices Without Looking Like a Jerk

Moneybox
A blog about business and economics.
March 19 2013 11:27 AM

How Apple Could Raise Its Conference Prices Without Looking Like a Jerk

I was listening to the latest edition of the Accidental Tech podcast, and the three hosts all agreed that Apple has a problem with regard to its World Wide Developer Conference. The thing is too oversubscribed, they said, but it would reduce the quality of the event to increase its size. Various possible solutions were mooted, but everyone agreed that the obvious approach of raising prices was out of the question. As Marco Arment put it, they can't do that because if they did they would "look like jerks."

That seems like an easily fixable problem to me. Apple could raise prices and donate the money to charity. Give it to Bay Area homeless shelters. Give it to a foundation that teaches poor kids how to code. Shower money on rural Kenya. Do whatever you want with it. The point is that WWDC is not a major operating business for Apple. It's something they stage to enhance the value of their overall enterprise by improving the quality of third-party software. They charge money for it primarily because they need a way to ration access. The current fee is failing to ration access correctly, but they don't want to raise the fee because that might cause secondary damage to the brand. So pick some smart brand-enhancing charity and give the WWDC fees to it. It's not like Apple can't afford to eat the small loss that would be involved in giving away 100 percent of the WWDC revenue. And higher prices plus charity would enhance the strategic purpose of the conference (since tickets would be allocated more rationally to those who really benefit from them) as well as generating some good PR.

It happens to be the case that one of the things Steve Jobs did upon his return to Apple was kill the company's corporate philanthropy. But sometimes a situation arises that's just screaming out for corporate philanthropy. A circumstance in which you'd like to raise prices for reasons of allocative efficiency without exposing yourself to charges of greed is just such an occasion.

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Popular musicians often face a similar problem. If your shows constantly sell out on the day sales are announced, you're not charging enough money. But artists reasonably fear that price gouging will damage their image in an industry where having your fans like you is very important. Raising prices and committing to give the money to a worthy charity is a way of reducing inefficiency queuing, maintaining a positive public image, and transferring financial wealth from scalpers to philanthropic organizations.

Matthew Yglesias is the executive editor of Vox and author of The Rent Is Too Damn High.

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