Essay about Itunes

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1. Provide an argument for why a variable pricing policy might increase the sales revenue from Apple’s Music Store (compared to the flat pricing policy). Variable pricing policy allows Apple to increase sales revenue by pricing more popular songs or artist at a higher price, then less popular songs or lessor known artist. Let us take for example the Grammy winner for Best New Artist Sam Smith and the song of the year Stay with Me, today you can purchased the song for $1.29, but let us assume ITunes ups the price to $1.39 sells 100 copies. $1.29 X 100 = $129 or $1.39 X 100 =$139, ITunes can increase sales by $10.00 for every 100 copies sold based on popularity. Eventually the cost of the song will increase due to popularity and ITunes…show more content…
Keeping with the same theme of the Grammy winner Sam Smith, ITunes will often make suggestions of other artist based on purchases and searches. If you do a search for Sam Smith and purchase one of his songs, ITunes will recommend other songs you might like. As a way to encourage you to buy these songs they will price the less know artist or song at lowers prices. Additionally, the three point price allows ITunes to make generate more revenue of less popular songs. As artists and songs become popular the more money the artists can request in royalties. The profit margin on lessor known songs and artist is probably greater at .69 cents and .99 cents than that of a more well-known artist at $1.29. 3. Discuss other potential pricing policies that might increase the revenue from Music Store sales. Another way Apple’s iTunes Music Store might increase revenue is with product bundling pricing. According to Brickley (2015), “bundling products extract additional profits from consumers with heterogeneous product demands, bundling can be more profitable than selling the products separately” (Brickley, p.g 243). For example, iTunes can generate more sales by bundling soundtracks to movie video or even audio books to movie video. I like that movie Pitch Perfect 2 and I downloaded the movie to watch while flying last week. I spent $9.99, the Pitch Perfect 2 sound track is $6.99. ITunes could have bundle these two together for $13.99, increasing possible

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