Some Apple Customers Outside US Pay up to 12% More, and It’s Not VAT

| Analysis

Many key products in the online Apple Stores in the UK and Australia are priced higher than straight currency conversions can account for. That's even after we take off value added taxes (VAT) and other sales taxes that are usually blamed for such discrepancies. We've often heard mutterings about this, but now TMO has crunched the numbers, and they don't make for pretty viewing.

Brits and Aussies

Customers in the UK are paying as much as 12 percent more on some products than across the pond in the U.S., and things are little better for Australians. For instance, Brits pay £1,832 for the base model 2.3GHz 15-inch Mac Book Pro with Retina display after subtracting the 20 percent VAT. But on a straight conversion basis, the U.S. price is £1,613, making the UK price 11.94 percent higher. Australians are paying A$2,908 (without sales tax GST), for the same model. That's 4.69 percent more than the straight conversion price of A$2,772.

Let's look at the data in a table:

Product iPad Air 16 GB Wi-Fi iPad Air 128 GB Wi-Fi + cell Mac Pro Quad Core Mac Pro Six Core Mac Book Pro with Retina Display - 13-inch 2.4GHZ Mac Book Pro with Retina Display - 15-inch 2.3GHZ
US Price (USD) $499.00 $929.00 $2,999.00 $3,999.00 $1,299.00 $2,599.00
             
UK Price -VAT (GBP) £332.00 £619.00 £2,082.00 £,749.00 £915.00 £1,832.00
Conversion £309.75 £576.66 £1,861.59 £,482.33 £806.34 £1,613.30
Difference (£) £2.25 £42.34 £20.41 £66.67 £108.66 £18.70
Difference (%) 6.70% 6.84% 10.59% 9.70% 11.88% 11.94%
             
Australian Price -GST  (A$) A$543.00 A$953.00 A$3,635.00 A$4,817.00 A$1,453.00 A$2,908.00
Conversion A$532.14 A$990.69 A$3,198.16 A$4,264.57 A$1,385.27 A$2,771.60
Difference A$10.86 -A$37.69 A$436.84 A$552.43 A$67.73 A$136.40
Difference % 2.00% -3.96% 12.02% 11.47% 4.66% 4.69%
             
Chinese Price – VAT (CN¥) CN¥3,067.00 N/A CN¥18,708.00 CN¥24,691.00 CN¥7,938.00 CN¥15,973.00
Conversion CN¥3,041.36 N/A CN¥18,278.61 CN¥24,373.51 CN¥7,917.28 CN¥15,840.65
Difference CN¥25.64 N/A CN¥429.39 CN¥317.49 CN¥20.72 CN¥132.35
Difference % 0.008361559 N/A 0.022952475 0.01285873 0.002610847 0.008286164

 

Other products might also raise some eyebrows. A 16GB iPad Air with WiFi costs £332 in the UK, 6.7 percent more than the £310 price we should expect. In Australia, that model is priced at A$543.00, just 2 percent more than the expected A$532.

A new quad core Mac Pro should cost British customers about £1,857 but it costs over 10 percent more, coming in at over £2,000. The same product should cost Australians A$3,116.80 but it actually costs A$3,635.00 - a whopping 14 percent more. Interestingly, in China that product is priced pretty close to a direct conversion of the U.S. price.

The UK chart shows just how much of a difference there is:

UK Price Comparison

Apple's Retail Prices in the UK (minus VAT) Compared to Converted U.S. Prices
Data and Chart by The Mac Observer

The Australian chart offers a similar view:

Aussie Price Comparison

Apple's Retail Prices in Australia (minus GST) Compared to Converted U.S. Prices
Data and Chart by The Mac Observer

What's particularly curious is that this isn't the case for all countries. In the key emerging market of China, for instance, prices are very close to U.S. prices once you subtract the 17 percent VAT China adds to the retail price. As shown in the chart below, our spot checks show prices vary from between under 1 percent to around 2.3 percent higher, essentially a dead heat when you consider the vagaries of currency timing.

We should note that China treats Apple products as imports, even though they are almost all assembled in China itself.

In our research we also find one product in Australia, a 128GB iPad Air with Wi-Fi + LTE, that is priced at A$953, some 3.96 percent less than the converted U.S. price of A$991. Such anomalies make the higher prices paid by Brits and Aussies discussed earlier even more curious.

China Price Comparison

Apple's Retail Prices in China (minus VAT) Compared to Converted U.S. Prices
Data and Chart by The Mac Observer

But Why?

The question is: why are UK and some Australian prices so much higher? As said above, this isn't the first time the question has been raised. Previously, the differences have usually been written off as the VAT added at the retail level. TMO did the math and asked Apple PR in London why.

The company responded with:

Apple suggests product prices internationally on the basis of several factors, including currency exchange rates, local import laws, business practices, taxes, and the cost of doing business.  These factors vary from region to region and over time, such that international prices are not always comparable to US suggested retail prices.

That does not shed much light on how these price differences arrive. While there is little doubt that Apple isn't pricing its UK and Australian products randomly or in a vacuum, as consumers in those countries, it would nice to know why our prices are higher.

We then tried to contact some leading British retailers of Apple products. Dixons, a group that owns electronics store Curry's, said "We cannot, of course, give details on our pricing strategy." John Lewis, a leading department store, did not return our email. UK consumer watchdog Which? also declined to comment on such a specific set of data without having a chance to look into themselves.

More Questions

Of course you are never going to get a price that is basically equal around the world based on the US Dollar. The costs of doing business naturally vary wildly, even without local taxation. There are also the obvious fluctuations that occur in the currency markets that make these comparisons a bit fluid.

At the end of the day, however, customers in the UK and Australia are clearly paying a higher rate for some of the best selling Apple products, more than can be attributed to simple currency value changes and local market conditions. It's time Apple and the retailers that stock its products start explaining why.

Bryan Chaffin contributed to this article.

Comments

gnasher729

Bryan, you could have asked around before you wrote the article. A major cost factor is consumer protection laws. In the USA, there is just manufacturer’s warranty. In all of the EU, the customer has significant rights against the seller of the goods and can demand that products should last for a “reasonable” amount of time - usually for about two years, but very much depending on the product.

That doesn’t come for free, obviously.

Another factor is that exchange rates change all the time, and Apple rarely changes prices, except when new products arrive. So converted prices go up and down, while the actual price in the country stays unchanged.

NEALC5

People tend to forget that part of the cost of doing business in each country are their wage laws, their health care laws, the price of transportation fuel, rent, etc.

Anyone that has been to Europe knows, for example, that the price of gasoline and diesel fuel is almost 3 times that of the US.  Companies are required by law to provide 4-5 weeks of vacation for each employee, labor laws limit overtime hours, etc. These costs add up, and add to the overall cost of doing business.

ctopher

so every other product from every other worldwide manufacturer has the same price except Apple? Oh wait, you covered that at the end without actually comparing any other products price.

So the question is Why? Why are you posting stories that single out Apple’s pricing and not other consumer electronics.

At the end of the day it appears that this TMO story discusses an economic topic without any understanding of international sales, support and marketing. While the data is in and of itself interesting, the article does little to inform. So we should ask the editors, why should readers put up with TMO’s righteous indignation?

Want to know why the prices are more? Here’s an answer, because that’s what Aussies and Brits are willing to pay!

Seriously, how is this a story?

(oops, my righteous indignation is showing! smile )

daemon

I think most of the discrepancy in pricing has to do with Apple liking to set a price point that Is above their cost and preferred margin amount that is also easy to market. 399, 499, 599, 699. Do you see a pattern here, cause I do.

Apple could sell the iPad Air for 372.26 pounds, but I don’t think they’re marketing team would like that number, I think they like numbers to end in 99. Hence the 399 pound price.

jfbiii

There’s also the cost of shipping that money back to the United Sta‚Ķoh. Never mind.

aardman

When you find out how much cheaper the exact same drug pr the exact same textbooks cost outside the U.S., you’ll say that finally, it’s about time we got the break!

webjprgm

Interesting data, but yeah I figure it’s what @gnasher729 and others have said with consumer protection laws plus different costs in labor, transportation, etc. 

I also wonder what the cost of shipping is. I assume the cost of shipping from China to China is pretty low.

I don’t want to be mean, but I often find Charlotte’s articles to be similarly lacking. I may just be biased in favor of TMO’s more seasoned writers, I don’t know.

vpndev

And don’t forget that most states in the U.S. charge a sales tax. Not all, but most do. Here it’s 6%

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