Pricing the Palm Pre

A lot has been written about the features of the Palm Pre. For many consumers, the Palm Pre phone checks most, if not all of the boxes when it comes to features they might want in a smartphone. That in itself is quite an accomplishment, given the competitive landscape of the smartphone market. There are some great phones out there and the Palm Pre has found itself mentioned with lofty company including the iPhone 3G and BlackBerry Bold, phones that also have their own impressive checklists. Us media types love to do the battle royale of smartphones, but it’s not always the case with consumers. Price has been for the most part a determining factor and will undoubtedly impact the sales of the Palm Pre.

Consumers look for a phone that ticks the boxes that matter most to them before making a purchase decision. Palm has yet to announce the price of the Pre, so missing from the current equation is price. If you crave the latest technology, then regardless of the price, you’ll find yourself online at the crack of dawn on release day with your credit card in hand. If you happen to be in Long Island, you might find yourself standing behind me and my venti cup of Starbuck’s coffee. Ignoring price is not typical of the average consumer. With the economy in shambles, price becomes a critical component of one’s purchase decision. A few years ago, Apple managed to sell the first generation iPhone for $599. Many balked that it could not be done and they even managed to get regular consumers to camp out for the iPhone. Those days are over. Maybe not the camping part, but the $599 price tag associated with next generation smartphones. So where does Palm price the Pre?

Price the Hype

If you think the hype surrounding the Palm Pre is deafening, then you just wait. This is nothing. Palm and Sprint have been generating low-level buzz since January. Chances are that your average consumer hasn’t seen, nor heard of the Palm Pre. Sound crazy? Ask a few co-workers if they’ve heard of the Pre and I’d venture to guess that less than 20% of respondents have seen or heard of the Palm Pre. That’s normal, as most consumers aren’t scouting Pre blogs, although I personally wish they would. A significant amount of consumers are probably planning to make a phone purchase in the next 6-months and haven’t even considered the Palm Pre. A recent survey cited by Motley Fool claimed that ony 4% of over 4,200 adult smartphone buyers planned to buy the Pre. What percentage of those buyers are well informed? The train hasn’t even left the station yet. I’m guessing those numbers will skew drastically once that same audience sees the upcoming onslaught of Pre advertising.

Sweeps week begins on April 23rd, which is next Thursday. A convenient window to take the Pre-hype to the next level. Must see TV? If a release date and new ad campaign launches, it’ll give me one more reason to set my TiVo. When it all hits, the Palm Pre will have a unique opportunity to be at the top of the tech heep. Just like the first iPhone, you can bet that consumers will crave the Pre.

This will present Palm and Sprint to "price the hype". The window of opportunity might last a month or perhaps two, but the companies can likely command a premium over competitive products. The iPhone 3G is priced at $199 (with a 2-year commitment and rebates). Palm and Sprint could easily slot the Palm Pre at $249 or perhaps even $299.

Price In Line With The Competition

Apple’s 8GB iPhone is priced at $199. If Palm wants to get a jump on the next generation iPhone, they can do so with a competitively priced Palm Pre. Price the Pre at $199 and price will not be a barrier to acceptance. While many love to link them (and so do I), we’re still talking Apples (literally) and oranges. For all it’s features, the iPhone is not the Palm Pre. The same can be said about the Pre not being the iPhone. However, a higher priced Pre might just be cause for a consumer checking that one addional box that affects a purchase decision in favor of Apple. If priced at $199, consumers will ultimately choose based upon preferred feature set and not on price.

Price For Acceptance

Palm will likely see massive sales of the Pre if they choose to "price the hype" or "price in line". If they really want to strike while the iron is hot, they’ll price it below the competition. They have a product that by all accounts is every bit as good as the compeition. If they would be able to deliver it at a price point below the competition, it would surely impact their sales numbers. This would also have a positive affect on the developer community. The more devices in the hands of consumers will drive the demand for new applications. Developers will take note and the cycle begins. More devices, more applications. Now rinse and repeat.

Our Thoughts

Palm has spent a signicant amount of time working on webOS and the Pre. Somewhere in Sunnvale, smarter folks than I are figuring out a pricing strategy for the Pre. As a consumer, my vote will always be the "lowest price possible". My gut tells me the company will seize the opportunity to capitialize on the hype and we’ll see a Pre priced at $249-$299. The Pre will be a hit regardless, but where it’s priced will a direct impact on sales figures.

What price do you expect to pay for the Pre? Are you ready to join our Palm Pre Campers group? Let us know in the comments.

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