I’m sure most of us have at some point had Windows- and Android-using friends ask us why we pay the ‘Apple tax’ – the price difference between an Apple product and what they perceive to be an equivalent competitor product.
A large part of the answer, of course, is that the competitor product isn’t equivalent at all. You can’t compare a MacBook with its premium materials, build-quality, high-spec components, screen quality and aesthetics with a low-end Windows laptop with plastic casing, low-spec innards and cheap and cheerful display. No more than you can compare an iPhone with a budget ‘droid. When you do genuine like-for-like comparisons with truly equivalent products, the Apple premium shrinks considerably.
But to get an accurate idea of the effective purchase cost, you also need to take into account both the replacement cycle and resale value …
Today’s CIRP data on replacement cycles confirmed what Apple users already knew: Apple kit remains useful for many years. It’s not unusual to use a Mac for four years, and when we do finally replace it, the old one is likely to be either passed on to a family member, or sold for a decent proportion of the purchase cost.
As a somewhat extreme example, I have an old iMac in my kitchen. When I say old, I mean it: it’s an iMac G5, a 2004 PPC machine. Admittedly I’m not using it for anything demanding – it is mostly used as a recipe book and a kitchen music system (hooked up to a pair of speakers and streaming music from a shared library on my main machine). But it’s a ten-year-old desktop computer, it’s still working perfectly and it’s still doing something useful.
If we instead choose to sell, we’ll get back a decent chunk of the purchase cost. eBay prices aren’t always a reliable guide, as people may post ads with unrealistic starting prices which then fail to sell. But if you scroll down the filtering options in the left-hand column, there’s a handy ‘Sold listings’ checkbox. Tick that, and it will show only completed sales – so the prices you see are the actual prices buyers paid.
Taking a look at a few ads shows just how well Apple kit holds its value. For example, this 2010 base model MacBook Air 11 – now 3.5 years old – sold for $500.
A new one today costs $999, so your effective purchase cost for the replacement is $499. Another way of looking at it is your cost of ownership was $143 a year. That Best Buy special Windows laptop someone bought for $300 three or four years ago is, in contrast, now basically worthless.
It’s a similar story with other models. For example, this 2009 iMac – that’s a five year old desktop computer – went for $650.
A new one today costs $1299, so effective replacement cost is $649 – or an annual cost of ownership of $130. Again, a five-year-old Windows desktop machine will barely be worth the hassle of selling.
Same deal with an iPad. Here’s a bottom-of-the-range iPad 2, three years old, which went for $255.
Replace it with the iPad 4 at $399, and your effective replacement cost is $144, or an ownership cost of $48 a year. Opt for the lovely iPad Air, and it’s instead $499, giving a replacement cost of $244 or an annual ownership cost of $81. It’s a similar story with iPhones.
Now, we could quibble over details here. Yes, I have cherry-picked my ebay ads to some extent, but not unrealistically so. I’ve opted for devices that were described as well looked after – as that’s probably going to be the case with most 9to5Mac types – but I’ve ignored any that went for stupidly high prices, assuming there was something dodgy going on. I’ve also ignored selling costs, which range from nothing on Craigslist to around 10% on ebay.
But I think the point stands, and matches my own experience when I upgrade my own kit. The resale value of an iPhone, iPad or Mac is a high percentage of the purchase cost because the useful lifetime of the device is far longer than is typical for competitor products.
So yes, we spend more on our kit than friends who buy cheap Windows laptops and cheap Android phones; yes, we do pay a premium for what we get; but the Apple tax is significantly smaller than many suggest.
How does your own experience compare? How long do you typically hang onto your Apple kit, and what do you do with it when it’s time to upgrade? Let us know in the comments.
FTC: We use income earning auto affiliate links. More.