Uneven/Unfair pricing in different country

[mcsarnai]

Hello everyone,

 

in the past few days i can't get this pricing problem out of my head. Almost all of the tech stuff costs more in Europe, than in the US, although the shipping and taxes won't add such a huge cost to the product. A did a little research, so i can show you, what i'm talking about:

MacBook Pro 15" with 2,9 Ghz, 512 Gb SSD with Touchbar: in the US: 2799 USD, in Germany: ~3900 USD), in Hungary(my country): ~3985 USD

Samsung Galaxy Note 8: in the US: 950 USD, in Germany: ~1185 USD, in Hungary: 1259 USD

Razer Blade 14": in the US: 1849 USD, in the UK: ~2285 USD, not sold in Hungary

EVGA GeForce GTX 1080 SC GAMING ACX 3.0, 08G-P4-6183-KR: in the US 582 USD, in Hungary: ~684 USD

Intel i7 8700k: in the US 404,99 USD, in Hungary: ~533 USD

 

It's really annoying, because in eastern europe we earn less money and the stuff costs more. Currently the average salary in Hungary is around 1100 USD.

 

Why are the componies not aware of this problem and try to bring the prices in the different country closer together?

Please share your opinion about this topic.

[Oshino Shinobu]

Taxes, shipping, import duties and then retail markup, combined with the quantity of the order makes up the price. 

 

Everywhere complains about the price in their country. For the computer components, a hell of a lot of them come from the US, so pretty much everyone other than the US and Canada have significantly higher prices. 

 

If they were going to fix the unfair pricing, Europe wouldn't be the biggest problem, it would be places like Brazil, Singapore, the Philippines etc. where things are ridiculously expensive. 

 

EDIT: a lot of the time it's not even the manufacturer that's the issue, it's the government and retailers, with higher taxes and higher price markups. The manufacturer likely sells at the same price to everyone, but costs go up after that. 

 

EDIT 2: You're also assuming that for-profit companies care about fairness. They want to make money, not make things easier for people in Eastern Europe.

[ImpulseRez]

Exchange rates, taxes, distribution costs, support costs, price elasticity.... Plus of course that most companies don't really care. If they are happy with their sales volumes and margins, why price lower?

[CyberC7]

5 minutes ago, Oshino Shinobu said:

Taxes, shipping, import duties and then retail markup, combined with the quantity of the order makes up the price. 

 

Everywhere complains about the price in their country. For the computer components, a hell of a lot of them come from the US, so pretty much everyone other than the US and Canada have significantly higher prices. 

 

If they were going to fix the unfair pricing, Europe wouldn't be the biggest problem, it would be places like Brazil, Singapore, the Philippines etc. where things are ridiculously expensive. 

 

EDIT: a lot of the time it's not even the manufacturer that's the issue, it's the government and retailers, with higher taxes and higher price markups. The manufacturer likely sells at the same price to everyone, but costs go up after that. 

 

EDIT 2: You're also assuming that for-profit companies care about fairness. They want to make money, not make things easier for people in Eastern Europe.

I agree, but your second edit seems a bit too cynical. They HAVE to at least give the smallest shit to what the consumer says. I know what you mean, but it would be beneficial for them to unplug their ears.

[Sakkura]

Every time I've checked, hardware in Denmark costs about the same as the US apart from the 25% VAT we add on top. Hungary might be another matter, but you can just buy from Germany or wherever if Hungarian retailers are too expensive.

[Shog]

I agree with the first two posts, however want to reiterate the costs change is significant when accounting for taxes, employees in those countries, and the lawyers and legal loopholes the companies need to fulfill to operate in those countries. 

[Oshino Shinobu]

Just now, CyberC7 said:

I agree, but your second edit seems a bit too cynical. They HAVE to at least give the smallest shit to what the consumer says. I know what you mean, but it would be beneficial for them to unplug their ears.

But like I said, it's not really the manufacturer that's creating the high costs. They'll normally set a price and that's what retailers or suppliers can buy it for. After that, it's basically out of their hands, they've got their money at the price they set. Maybe the supplier then jacks up the price for certain areas, or just the fact that in smaller markets like Hungary, they don't get larger orders to take advantage of the bulk discounts you get from suppliers, while a larger market like the UK will typically place more orders and have lower purchase prices (though our currency is going to shit right now, so it's getting more expensive). 

 

Other than that, government taxes, shipping costs and such all add up and are often higher for smaller countries without established bulk shipping routes and such. Then retailers may mark up the price more to make up for the relatively small quantity and expensive cost, resulting in high prices. 

 

You can tell manufacturers to open their eyes, but it's ultimately not them that's causing the high prices. 

[Sakkura]

23 minutes ago, mcsarnai said:

EVGA GeForce GTX 1080 SC GAMING ACX 3.0, 08G-P4-6183-KR: in the US 582 USD, in Hungary: ~684 USD

Intel i7 8700k: in the US 404,99 USD, in Hungary: ~533 USD

I just looked up the Hungarian VAT rate, it's 27%. So adding 27% to those US prices, they would be $739 and $514. So if you pay $684 and $533 in Hungary, you're not being treated worse than Americans.

 

Laptops and phones may be another matter. Maybe because those are sometimes status symbols.

[Oberon.Smite]

Companies don't care what you as the consumer pay as long as they're getting their money. Most of the extra cost is goign to come from import taxes and the price increase that stores set. Calling it 'unfair' is kind of petty honestly. 

[Sakkura]

3 minutes ago, Oshino Shinobu said:

But like I said, it's not really the manufacturer that's creating the high costs. They'll normally set a price and that's what retailers or suppliers can buy it for. After that, it's basically out of their hands, they've got their money at the price they set. Maybe the supplier then jacks up the price for certain areas, or just the fact that in smaller markets like Hungary, they don't get larger orders to take advantage of the bulk discounts you get from suppliers, while a larger market like the UK will typically place more orders and have lower purchase prices (though our currency is going to shit right now, so it's getting more expensive).

This is definitely not the case. Even a very small country like Denmark has absolutely competitive pricing.

 

The reason for this is that you shouldn't think of countries as separate customers. It's not like Denmark goes into a shop and buys 10 CPUs, then the US goes into the shop and buys 600. It's more like Rotterdam and Los Angeles get a few containers worth, and then it's spread around through a distribution grid that's about as finely grained on either continent. Maybe borders in Europe add a tiny bit of admin cost, but then transport distances in the US are longer and add a little bit of cost there. Overall it's probably a wash.

[Eduard the weeb]

if the companies want to earn a profit that really is the only way, with things like shipping, taxes, storage facilities,  store shelves, etc This has been a problem for mainly countries and companies, EX massdrop deals really don't make sense if you aren't in Australia, Canada, or the US.

[LogicalDrm]

1 hour ago, mcsarnai said:

 although the shipping and taxes won't add such a huge cost to the product.

 

Thats only thing that is different. While US is not manufacturing place for most stuff, they have really good trade deals with Taiwan, China and other manufacturing countries. Plus, most US stores don't list prices with tax included like most European countries do. They don't because taxes on electronics and sales overall vary between states, and sometimes even counties.

 

In your country, my country and Germany, basic taxing is higher than in US. Plus EU has very strict import laws to give local business at least chance of competing with webstores. So price in here is combination of high tax, import duties and some shipping costs. Plus margin store has to add to keep them in business.

 

No, its not fair. But I'm sure there are some things in your country that are cheaper than in mine for example.

[SpaceGhostC2C]

1 hour ago, mcsarnai said:

In the past few days i can't get this pricing problem out of my head. Almost all of the tech stuff costs more in Europe, than in the US, although the shipping and taxes won't add such a huge cost to the product.

Actually, most of the times it does.

1 hour ago, mcsarnai said:

Why are the componies not aware of this problem and try to bring the prices in the different country closer together?

What do you mean "not aware"? Companies will purposely set prices apart in different regions, countries, or even individual consumers whenever possible to make the highest profit from their products. There are countless examples, like the cost of a can of soda at a supermarket, a vending machine, and a restaurant, the price of flight tickets, the creation of superfluous "DVD regions", selling software in different languages as a different version instead of selling one single multi-language version...

Companies always examine the possibility to actively set different prices for different consumers, and decide whether it's feasible (logistically and legally) and profitable in each case.

 

53 minutes ago, Sakkura said:

Every time I've checked, hardware in Denmark costs about the same as the US apart from the 25% VAT we add on top. Hungary might be another matter, but you can just buy from Germany or wherever if Hungarian retailers are too expensive.

Up to potential shipping costs from Germany (and willingness to ship, as the recent policy change in Mindfactory shows).

[Mira Yurizaki]

1 hour ago, mcsarnai said:

Why are the componies not aware of this problem and try to bring the prices in the different country closer together?

They probably are, but they can't do anything about it because:

• They still have to pay a base amount in materials.
  • An iPhone for instance costs around $250-$350 in parts alone.
• The country may impose import taxes.
  • The PlayStation 3 in Brazil retailed for around the equivalent of $1000 USD. The only reason for that was because of Brazil's import duties and Sony shifted the cost to the consumer.
• The country may have a hefty sales tax on top of the normal price.
  • The US for example has an average sales tax of around 8.5%. Some states don't have sales tax (like Oregon). Some countries in the EU have upwards of 20%. Though I think pricing in the EU includes VAT, unlike the US. So a $400 video card is really going to cost about $420.

I would also add in a bit of supply and demand in the mix and how many retailers are selling the product. If there's only one major computer shop in the country, then they're going to price gouge.

[mcsarnai]

Thank you everyone, for the detailed explanation. Now that i know more about it, makes obviously more sense. The costs in my country are most likely high, because of the 27% VAT, 2,5% import charge or higher (i did a research on that).

So thank you for all your replies, and have a good evening or day.

[GoodBytes]

Beside what was excellently explained by Oshino Shinobu. Keep in mind that in U.S and Canada prices does NOT include sales taxes. So the price at the cash register is higher. The sales tax is not included as it allows companies to not have to do catalogues/flyers/website sections for the different states/provinces and even you can have different sales tax in different counties and cities.

 

For example, in Austin, Texas, the sales tax is 8.25%.

While in Quebec in Canada, you have 5% tax from Canada, and then on the total of that, you have 9.5% tax, which from Quebec. As it is calculated after the total of the previous tax, it results in a tax of 9.975%. So it comes out to roughly 15% tax. Yes, it's complicated. But just multiply the price by 15%, and it will be a hint less at checkout.

 

Also, anther factor is market price. If every chocolate bars is sold at 2$ in your region, and people are happy with that price, expect that that a new comer will also sale its new chocolate bar for 2$ as well, and not 1$ like in other regions.