Analyzing Managerial Decisions: iTunes Music Pricing

Analyzing Managerial Decisions: iTunes Music Pricing
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Provide an argument for why a variable pricing policy might increase the sale revenue from Apple’s Music store (compared to the flat pricing policy)
A variable pricing policy might be better suited to increase revenue, given that the demand for different songs varies. There has been an increase in online file swapping sites, meaning that consumers are spoilt for choice when in need to download music (Brickley, Smith & Zimmerman, 2009). At other times, there are illegal downloads through piracy. Apple has consistently used a fixed pricing system for ITunes, no matter the popularity of songs. However, an increase in prices for unpopular songs will diminish the songs popularity further. The music companies would be attracted by Apple’s variable pricing model which takes into account the popularity and quality of music in influencing the price. The music companies would in turn share profits with Apple meaning that the most popular songs would be a bigger source of revenue.
Discuss other potential pricing policies that might increase the revenue for Music Store sales
Besides the variable pricing model, Apple can rely on low pricing of music products in order to increase the number of customers. Given the availability of other online platforms offering the same music, then low prices will likely result to increased demand and hence improved revenue. Another option is for Apple to diversify their music file formats in order to meet diverse consumer needs. In other words, there ought to be a variety of file formats, other than iTunes which are easily converted to the desired music format if need arises. Another alternative is to bundle popular and unpopular music together, and as people seek popular music, they may also buy ...