Wanna make $100 million in two months without going to prison?  Here’s how:

1. Develop a niche product and image that spawns hordes of elitist and loyal fanboys.
2. Eliminate low class customers with prices higher than those of your competitors.
3. Introduce new product into the market after creating 6 months of buzz; price it at $599.
4. Sell 1,000,000 units. 
5. Discount new product two months after introduction to $399.
6. In the case of fanboy revolt, issue a blanket $100 refund check.

It worked for Steve Jobs…it may work for you as well.  He risked alienating close to one million loyal Apple fanboys by charging them a $200 premium for the honor of being the first guy in Brentwood to accesorize with an iPhone.  Some people scratched their heads when the iPhone was introduced, wondering how the tiny consumer electronic device could have cost so much to manufacture.  The scratching stopped after everyone realized that 25% of the sticker price was pure fluff…excess cash covering nothing except Apple execs with liquid gold. 

Jobs isn’t stupid, nor does he employ milque-toast market operatives.  An iPhone priced at $399 covers the cost of development, manufacturing, and marketing, leaving Apple a likely gain of $15 profit per unit.  At $599, however, Apple’s profit per unit swells to $215 profit per phone.  Jobs and Co. correctly forecasted 1,000,000 units in two months, giving them the option of making either a reasonable $15 million profit or a greedy $215 million profit.  Most of us already know which option was chosen.

So how does a company, successful because of its image as the “alternative” to evil and greedy Microsoft, bilk its most loyal fanboys out of $200 million without being branded as MicroSoft Part Deux?  Simple:  hedge the risk of “early adopter” alienation with a contingency plan to issue $100 refunds in the event of vegan revolt. 

It was a brilliant plan, and it worked.  Feeling betrayed, Intel-o-clasts revolted when the price dropped by $200, and Jobs salvaged his reputation by giving up half of the $200 million he stole.  Fanboys rejoiced at the new iPhone price, emo-techs salivated over the news of an updated touch-version, and salad-tossing journalists glossed over a devious business tactic that even the most ruthless at WorldCom and Enron wouldn’t dare attempt.

Is this how b-schools will educate future students?  Will Wharton and Harvard focus on studies in “image development” capable of insulating companies against immoral and greedy behavior?  Sounds a bit silly, but in a world where business is no longer a profit/customer retention balancing test, not much else is needed.  Indeed, when Apple can be greedier and more manipulative than Microsoft could ever dream, and when Apple’s pristine and innovative image survives unscathed, the argument is a valid one.

I don’t expect a company to act in my best interests, but I do expect a company to find a way to produce a product that gives them a (reasonable) profit while providing me with quality and utility.  I’ve not given up on that ideal, and there are still a number of companies out there that understand the benefit of treating customers well.

I have, however, given up the hope that blind Mac devotees will snap out of their fog and recognize that they bought a laptop, not their personal idendity.