With the Tile Pro coming in at over $30, pretty much everyone assumed that the combination of added smarts and Apple branding would see AirTag come in at a significantly higher price, likely in the order of $50 …
As it turned out, AirTag costs half that if you buy a pack of four, and only $29 if you buy them individually.
That puts AirTag firmly into the kind of territory where they become a no-brainer for most iPhone owners. Even if you just buy one, and move it between bags, $29 is a very small price to pay for that kind of peace of mind.
Many customers will go further, of course, and buy one or more packs. For my own part, I’m likely to add one to my keyring, and one to each of the bags I use most frequently, as well as my travel bags.
That kind of pricing also makes them an affordable gift – perhaps people will even add one when gifting someone an expensive bag.
We don’t yet have any idea of Apple’s margins on the device – though teardowns are likely to provide some clues once they ship – but the company may not care too much. Because Apple also offers an extensive range of AirTag accessories, most of them costing more than the device itself.
Indeed, the most expensive combo Apple sells is the AirTag Hermès Luggage Tag – a bespoke version of the AirTag itself plus a leather tag for a cool $449.
But even the very cheapest Apple AirTag holder costs $29 for a bag loop or $35 for a keyring, while a leather bag loop bumps the price up to $39. There are cheaper third-party ones, but I think it’s safe to say that a rather high percentage of AirTag buyers are effectively going to be paying over $50 each, all in.
The margins on those tags are going to be huge. On Alibaba, you can pick up leather keyrings for well under a dollar each, and leather luggage tags for $1-$2. Of course, Apple will be using much better-quality leather, but you can find ones with decent leather for a few dollars even in small quantities. These are items that will be costing Apple a tiny fraction of their retail price.
In this way, AirTag pricing is a win-win. If you want just the tag itself, you can pick one up at a really appealing price. You might carry it loose in a bag, or attach it with double-sided tape or velcro, and pay the advertised price. But Apple knows that many people will opt for its own-brand holders, allowing it to make fantastic margins on a low headline price.
AirTag is a smart device, but Apple’s AirTag pricing is arguably even smarter.
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