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October 14, 2006
Seeing (Red)
So, Apple has decided to join with (Product)Red and create a killer candy apple (fittingly) red iPod nano. The iPod Nano (Product)Red retails at the same price as the regular Nano, $199US.
Many people online are dismayed that Apple is only donating $10, or 5%, of their total sales of the new iPod. Apple happens to be the most forthcoming, stating a specific amount. Other companies involved either state percentages of sales, profits, or even wholesale prices to figure their donations.
The one of the moregenerous companies, according to sources, appears to be Gap which is has a huge line of 40 (Product)Red items. Gap is also donating 50% of profits of these items. Motorola will donate $17US(£10) to (Product)Red.
To figure out how much companies are actually donating, let's set the playing field level. We know that the iPod is $200 so we'll use $200 as our guideline. Some companies donate based on profits or wholesale, we'll set the estimated profit margin to 50%. That means that if a product costs a dollar to make, it'd be sold for $1.50. A $200 product with a markup of 50% would have a wholesale cost of $133.34 and profits of $66.66.
Please note that a 50% markup is an estimate based on years retail experience. Very, very few products are 'keystoned' (set to a 100% profit) anymore. IE, $2 product cost $1 to make.
So how much are other companies donating in comparison?
| Company | Product (Cost) | Donation Amount | Donation at $200 | Notes |
|---|---|---|---|---|
| Apple | iPod Nano (Product)Red | $10 | $10 | Baseline. $10 is donated regardless of actual profit or price. A education store user who gets 10% off will still have $10 donated. |
| Gap | Various | 50% of Profits | $33.33 | Profit margin figured at 50% with a total profit on $200 of $66.66. This is probably a very generous esimate for Gap. |
| American Express | American Express Red Card | 1% of Total Spent on Card | $2 | 1% of each purchase is donated to The Global Fund. |
| Converse | Various | 5%-15% of Wholesale Cost of Product. | $6.66-19.99 | With an estimated $200 item and 50% markup, we belive the wholesale would be $133.33. Converse has a large line of (Product)Red items, but donate betwen 5 and 15%, depending on the item. |
| Motorola | Razr | $17 | $11.22 | SPRINT(!!) is retailing the red RAZR for around $300. This is the direct conversion of their £10 donation from (Product)Red UK |
| Motorola | BlueTooth Headset | $5 | $14 | Retail for Headset is $79 from MotoStore, donation is roughly 7% |
Obviously, Apple's donation is fairly middle of the road. American Express' donation is nearly pathetic, donating just $2 out of the baseline $200.
On an interesting note, Apple UK only claims a 'Portion' of the price. I believe we can assume that Apple is probably donating the same amount in the US and in the UK. If you convert $10US to British Pounds, Apple is donating £5.37, which pales compared to Motorola's donation.
Many people have also stated that Apple has broken (Product)Red tradition by calling it the iPod Nano Product Red. It appears that this is the standard for some in the US version, as Converse and Gap are also marketing their products by the item name followed by (Product)Red. Motorola's efforts are all over the place using both conventions. American Express calls their card American Express Red, which creates a separate convention all their own.
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Posted by aristan at October 14, 2006 11:25 PM