So I took a chance....and got burned (or scratched).

Andrew Clark1

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Apple sells Apple Care Plus to its customers who want it. Why would Apple do that? I highly doubt it’s out of the kindness of its heart. Since Apple is a business, it’s safe to say that it saw an opportunity to make more money.

Think about it. Let’s say that one million people spent $129 on Apple Care Plus. That’s equates to 129 million dollars. A majority of the people in this example will more than likely buy a protective case for their device and others will also purchase a screen protector. Even if 10% of those people damaged their device and got it replaced with Apple Care Plus, they still have to fork over $29 for screen repair and $99 for a replacement device.

100,000 people (10% of a million) would pay Apple an additional 2.9 million dollars combined if they all needed screen repairs. Those same people would pay Apple an additional 9.9 million dollars combined if they all needed a replacement device. That’s additional money paid to Apple on top of the 129 million that’s already been paid.

The iPhone X allegedly cost $370 to build. If the 100,000 people got replacement iPhone X devices, that equates to 37 million dollars. That’s far less than the $129+ million that Apple has made selling Apple Care Plus.

Here’s the kicker. I will argue that 80% of the aforementioned million people are on an installment plan either with Apple or their wireless carrier. In other words, they don’t even own the phone outright yet.

You said that “Someone has to pay for the people who deliberately drop their phones and get them replaced under Apple Care Plus...”

It looks to me that the debt has long been paid.

Well said. Well said
 

Tartarus

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I am completely lost as to what you are claiming. Please can you clarify whether you think the cost of Apple Care Plus is related to the level of claims or not?

There are too many factors when it comes to deciding what to charge for an insurance, the level of claims being one of them, but sure enough not the major reason.
 

anony_mouse

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So you now agree with me? Good. :) The price of a product or service will typically be set to attempt to maximise the profit. Higher prices give higher margins, of course, but lower prices mean you sell more. And remember that it's not just a question of the value of the thing itself in isolation - the price of competing products and services is also important in setting prices.

Competition is the foundation of a market economy. If one company sets prices too high (for example, by setting far above the cost of providing the product or service in question), others will step in and undercut them, while still making a profit for themselves.
 

Tartarus

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So you now agree with me? Good. :) The price of a product or service will typically be set to attempt to maximise the profit. Higher prices give higher margins, of course, but lower prices mean you sell more. And remember that it's not just a question of the value of the thing itself in isolation - the price of competing products and services is also important in setting prices.

Competition is the foundation of a market economy. If one company sets prices too high (for example, by setting far above the cost of providing the product or service in question), others will step in and undercut them, while still making a profit for themselves.

You’re inconsistent in your thought train. It’s hard to keep up with what you really want and what you’re standing for.
 

anony_mouse

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There are too many factors when it comes to deciding what to charge for an insurance, the level of claims being one of them, but sure enough not the major reason.

In a competitive market, the cost of servicing claims would seem to be the major factor in setting the price of insurance. If not, the insurance is likely to be poor value. Wouldn't you agree? Or am I still missing your point?
 

anony_mouse

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You’re inconsistent in your thought train. It’s hard to keep up with what you really want and what you’re standing for.

Could you point out my inconsistencies?
Well, there is one... My points are somewhat rhetorical, of course. I am arguing that Apple Care Plus is poor value for people who don't regularly damage their phones, such as me. You might argue that that shouldn't happen in a market economy. Why does it? I guess it's because lots of people buy Apple Care Plus who don't benefit from it, and would be better off without it.
 

Just_Me_D

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Your example does not such thing. It's just a load of numbers. Do you get my point? The pot has to be large enough to cover all the claims, and the probable sales commission, and the cost of running the scheme, and leave a profit for Apple. The cost of the claims depends on the claims that people make. People who deliberately drop their phone as suggested by Andrew Clark1, and people who break their phone every year, and people who keep their phone in the same pocket as their keys, get to take a disproportionately large amount of money out of the pot - and increase the cost to careful people like you. Don't you think that Andrew Clark1's scheme is a bit selfish?

Anyone who pays into the pot can make two claims. Is that not the agreement? Whether they should or shouldn’t is irrelevant. If they’ve paid into the pot, Apple is going to repair/replace the device. Period!
 

anony_mouse

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Anyone who pays into the pot can make two claims. Is that not the agreement? Whether they should or shouldn’t is irrelevant. If they’ve paid into the pot, Apple is going to repair/replace the device. Period!

No. Read the terms and conditions (example from the UK: https://www.apple.com/legal/sales-support/applecare/applecareplus/docs/applecareplus_uk_tc.html#mn_p), in particular clause 5.1.2.1 under Exclusions.
Deliberate damage such as that suggested by Andrew Clark1 is not covered. Claiming in these circumstances is likely to be fraud. Don't do it.
 

si001

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I could never use a $1,149 device without a screen protector, not even for a second. Glass scratches. I'm sorry this happened to you. Hopefully your experience will have people thinking differently how they take care of their device.

Well I guess there is different point of view on this. For me, I would never hide my 1,149$ device I manipulate all day long behind a screen protector and/or big case.
 

Just_Me_D

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No. Read the terms and conditions (example from the UK: https://www.apple.com/legal/sales-support/applecare/applecareplus/docs/applecareplus_uk_tc.html#mn_p), in particular clause 5.1.2.1 under Exclusions.
Deliberate damage such as that suggested by Andrew Clark1 is not covered. Claiming in these circumstances is likely to be fraud. Don't do it.

My gosh! We all know and understand what is written. Apple is going to replace the device if the person has purchased Apple Care Plus. Each Apple Care Plus purchaser has two repairable/replaceable incidents, each costing the buyer money. Do you understand?

If the buyer deliberately breaks his or her device and is stupid enough to tell Apple that he or she deliberately broke it then it will be difficult to get the device repaired/replaced via Apple Care Plus. I did not say “impossible”. If a person pushes hard enough, Apple would cave because it would be cheaper to do so and it would leave the buyer with one remaining incident. Do you understand?
 
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Garz

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I doubt Apple said “we’re making too much money; we should lower prices”. They probably figured they’d sell more AC+ contracts if they lowered the price, adding to a greater overall profit. Maybe I’m wrong here, but I just don’t see Apple—or any for-profit corporation—lowering prices just to make less money.

They aren’t worried about making a ton of profit on apple care. A little? Sure. Their goal on apple care is to offer people protection at the best affordable price without losing money. And likely hoping to make a little.
 

Rob Phillips

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They aren’t worried about making a ton of profit on apple care. A little? Sure. Their goal on apple care is to offer people protection at the best affordable price without losing money. And likely hoping to make a little.

Thanks Garz. Maybe I’m going back to my days working at Circuit City in the late 90’s but we made a TON of money on extended warranty sales and there were huge incentives to sell them. Perhaps it was different because WE weren’t the manufacturer and certainly weren’t brand specific.
 

Garz

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Thanks Garz. Maybe I’m going back to my days working at Circuit City in the late 90’s but we made a TON of money on extended warranty sales and there were huge incentives to sell them. Perhaps it was different because WE weren’t the manufacturer and certainly weren’t brand specific.

It’s different. Circuit city is not the manufacture. You think apple is dropping apple care on certain productions if they are trying to make a ton. Circuit city selling extenders warranties is like a car dealer trying to make a killing on an extenders service contract. Apple wouldn’t drop the price on a a couple of products if they were trying to make a killing.
 

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