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These tools also enhanced the price of their products and gave them an advantage over their competitors.
In average, the cost of a $200 iPod is about $90. Apple prices also account for the promotion and service they offer to their clients. With this margin, Apple can afford to provide a service that no other competitor can...
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So when a consumer buys one of his products, he/she is also paying for a service that will follow through most of the life of the product he/she purchased.
If Apple raises the price of the iPod, I believe we would only see a small decline in demand for the product if any. Them we would be able to say that the iPod is price inelastic...
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