Love the iPhone pricing data - such a wide range for 'essentially the same device.' This strategy is so critical (and effective) in the B2B sales process too -> providing multiple different price points overcomes the classic "too expensive" objection and also avoids devaluing your product with massive discounts. When you only have one, or a limited number, of price points in the B2B process you end up selling the 512GB device for the price of the 128GB device too often just to 'close the deal.'

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Nick, this is a great essay and should be required reading in Econ 101!

Then, in Marketing 501 - this part should be required discussion: "At 512GB, you’re not getting storage as much as you are getting the peace of mind that you won’t run out. How much is that peace of mind worth?"

As an Econ major, I haven't heard "consumer surplus" in a long time and smiled when I read it.

Thanks for this excellent post.

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