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

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:

ProductiPad Air 16 GB Wi-FiiPad Air 128 GB Wi-Fi + cellMac Pro Quad CoreMac Pro Six CoreMac Book Pro with Retina Display - 13-inch 2.4GHZMac 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$543.00A$953.00A$3,635.00A$4,817.00A$1,453.00A$2,908.00
ConversionA$532.14A$990.69A$3,198.16A$4,264.57A$1,385.27A$2,771.60
DifferenceA$10.86-A$37.69A$436.84A$552.43A$67.73A$136.40
Difference %2.00%-3.96%12.02%11.47%4.66%4.69%
       
Chinese Price – VAT (CN¥)CN¥3,067.00N/ACN¥18,708.00CN¥24,691.00CN¥7,938.00CN¥15,973.00
ConversionCN¥3,041.36N/ACN¥18,278.61CN¥24,373.51CN¥7,917.28CN¥15,840.65
DifferenceCN¥25.64N/ACN¥429.39CN¥317.49CN¥20.72CN¥132.35
Difference %0.008361559N/A0.0229524750.012858730.0026108470.008286164

 

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.