Pricing in EU vs US

[BenM98]

Hi! I'm a computer science student from central Europe, Hungary. I wanted to respond to one of the topics in the latest WAN Show.

 

The topic I'm talking about is the price of US based company's products in Europe. I want to begin with Apple products because they are the most overpriced here. Many things are reasonably priced in the US. The iMac Pro base model is almost as much as the sum of the components and laptops are considered cheap compared to the European prices.

 

So take a look at this: If you look up apple.com and apple.hu (the Hungarian Apple site) and click on iPhones, you see a strange thing. The US site has them starting at 999$ for the XS and 1099 for the XS Max, the Hungarian site on the other hand asks for 399,999HUF (1,436$) for the XS and 439,990HUF (1580$) for the Max. That is not a small difference. And the gap between the prices continue to grow as you select the higher storage capacity models. The most dramatic is the 512GB XS Max that supposed to cost 1449$ but in Hungary it will run you 577,990HUF (2076$). That is incredible. It is a whopping 627$ gap. For that price you can buy the maxed out OnePlus 6.

 

Check out the fully speced iMac Pro tho: In the US it's 13,199$, in Hungary it's 4 784 790 HUF which is 17,052$. And yes, I know this includes taxes but there isn't a state where you would have to pay 4,000$ of taxes.

 

Now to be fair, this is not completely Apple's fault. The import fees are 27% and taxes are just stupidly high from the US. This happens to every US company's product over here, like Surface Books, Dell XPS notebooks... If you are importing from Asia (like Samsung and Xiaomi phones) the taxes and import fees are almost 0. If you check out the Hungarian T-Mobile website and choose the S9+ and iPhone XS for comparison you can see that the 64GB models are 285,000HUF (1024$) for the S9+ and 399 990HUF (1,436$) for the XS. It's a 400$ difference while in the US it's 80$ (as of now on at&t's site). The problem is that it doesn't matter that it's not Apple's fault, the consumer only sees the price tag. This is one of the main reasons that Apple is not doing so great over here.

 

I also want to point out that here, you have to give 2 years of warranty as a phone vendor, so that might increase prices. But the 2 year warranty is applied to every other phone too, not just iPhones, and the T-Mobile site I referred to already has the warranty fees in the price.

 

The problem however is present with laptops too. Here is an example: 

The Dell XPS 13 with an I7 8550U, 16GB of ram, 1TB SSD and a 4K panel costs 1800 US Dollars on BestBuy. If you check out one of Hungary's biggest electronics stores called edigital you see that a similarly built machine costs 935 990 HUF which is 3,335$. And this model has a last gen i7-7Y75. That is such a ridiculous difference that it doesn't make any sense buying a high end product like it. Sure you can buy it from amazon, but even then it will cost you a lot more and you won't have a place to take your notebook back to if it needs a quick repair.

 

It is actually pretty hard to get relevant comparisons because companies like Razer don't sell their stuff here. Your options are importing it or buying used. The LG Gram and Surface devices are basically impossible to find here. The other problem is that even if you find something it's most likely running outdated hardware, like older processors.

 

I get that as an EU citizen I get 2 years of warranty with every purchase, but I don't think that it makes up for these price differences. People used to joke about buying a plane ticket and going to the US, buying the stuff you need and coming back with money saved. This joke is starting to sound like a great idea nowadays.

What do you guys think?

[genexis_x]

3 minutes ago, BenM98 said:

this model has a last gen i7-7Y75

It's the XPS 13 2 in 1, completely different model

4 minutes ago, BenM98 said:

What do you guys think?

Pretty normal I guess. Happens in every country so nothing special

[GoodBytes]

Feels like every month, you have this topic.

• US and Canada pricing does NOT include sales taxes. In Europe you do. The reason for this is that sales taxes varies from the state/province and even city you are in. It's complicated, so they don't include it.
• You need to add shipping cost. Further you are from the distribution center of the company, the more expensive things is. If your market is small for the company, don't expect a distribution center where you are. If you live on a "island", like England or far apart, like Australia, shipping will be very expensive.
• Import duty fees and other governmental fees. If what you are buying is part of a free trade agreement, things will be less expensive than if the country exposes a tax on the item. This tax can be a few percentage point to hundreds of percentages. Complain to your government.
• Region/countries regulations plays with the part of the price. If a country demands 2 year warranty, than obviously, it means that the company will need to add the cost of support for that extended period from originally planned, and keep parts on the side for potential servicing.

[Rohith_Kumar_Sp]

The frustrating part for us here in India is that sites like uplay redirects it to EU pricing, not the USA pricing, and EU to INR, is damn expensive, there is no way around it, it fcks us as hard as you European people. for reference 1$ = 73.48 INR, but 1 Euro = 84.72 INR, there is literally no reason we have to get the EU pricing but we still do. 

[BenM98]

5 minutes ago, GoodBytes said:

Feels like every month, you have this topic.

• US and Canada pricing does NOT include sales taxes. In Europe you do. The reason for this is that sales taxes varies from the state/province and even city you are in. It's complicated, so they don't include it.
• You need to add shipping cost. Further you are from the distribution center of the company, the more expensive things is. If your market is small for the company, don't expect a distribution center where you are. If you live on a "island", like England or far apart, like Australia, shipping will be very expensive.
• Import duty fees and other governmental fees. If what you are buying is part of a free trade agreement, things will be less expensive than if the country exposes a tax on the item. This tax can be a few percentage point to hundreds of percentages. Complain to your government.
• Region/countries regulations plays with the part of the price. If a country demands 2 year warranty, than obviously, it means that the company will need to add the cost of support for that extended period from originally planned, and keep parts on the side for potential servicing.

Yes. You are right, it includes shipping and taxes. But can you tell me how much taxes you have to pay on average in the US? According to Wikipedia "California has the highest state sales tax with a base rate of 7.25%". Here we have 27% taxes and the reason for it is that governments have to support free healthcare, schools... All I'm asking is that: Is it worth to have this?

[LogicalDrm]

I honestly take hardware and general tech pricing any day if I can keep our internet/mobile plans right how they are now. I don't mind spending 20% more on hardware every few years if I can save that in yearly costs for internet. €10/mo for 4g/30mbps mobile (true unlimited), €30/mo for 10mbps internet in my last place (currently in student apartment with free internet). In a year thats about price for 1070Ti.

[Sakkura]

19 minutes ago, GoodBytes said:

Feels like every month, you have this topic.

• US and Canada pricing does NOT include sales taxes. In Europe you do. The reason for this is that sales taxes varies from the state/province and even city you are in. It's complicated, so they don't include it.
• You need to add shipping cost. Further you are from the distribution center of the company, the more expensive things is. If your market is small for the company, don't expect a distribution center where you are. If you live on a "island", like England or far apart, like Australia, shipping will be very expensive.
• Import duty fees and other governmental fees. If what you are buying is part of a free trade agreement, things will be less expensive than if the country exposes a tax on the item. This tax can be a few percentage point to hundreds of percentages. Complain to your government.
• Region/countries regulations plays with the part of the price. If a country demands 2 year warranty, than obviously, it means that the company will need to add the cost of support for that extended period from originally planned, and keep parts on the side for potential servicing.

1. True. People forget about this all the time, and it is by far the biggest reason for price differences.
2. Shipping costs apply just as much for the US. Most of this stuff is made in East Asia. Also, England is not an island in logistical terms - you can offload in Rotterdam and truck/train to England via the tunnel.
3. Electronics tend to have low tariff rates, and right now they're definitely lower in the EU than the US.
4. Yeah. But then you also need to take other things into account, such as purchasing power and exchange rates.

Anyway, when I look at prices in Denmark, Linus is generally wrong. Most electronics cost about 25% more than in the US... and we have a 25% VAT rate that fully explains the difference.

 

Apple still manages to buck that trend though. The iPhone XSes each get about a hundred bucks added on top, before tax.

[GoodBytes]

I also forgot to mention that there is also market price.

If you make 1$ per week, good chances that a Chocolate bar that is 1$ in US, is pennies over there (this is because manufacturing can be setup to produce the same good for far cheaper). How does that relate to electronics if it is all made at the same place? Well not necessarily made at the same place, but support can cost less, shipping can be less. Also, for some companies like Apple and recently Samsung, or Microsoft Surface line system, it isn't "production cost + marketing + operational expense + R&D + etc... + profit margin", but rather "We don't care how much it actually cost us, how much are people willing to pay for this device?", And this is where high pressure is put on the marketing team, and marketing team takes product design decisions. This price can vary between market with the target audience they want to get: executives, ultra rich, etc. It is a human flaw to want what we can't have, and when humans have this feeling, they will go above and beyond to get it... including selling a kidney to pay the premium price.

 

[GoodBytes]

45 minutes ago, BenM98 said:

Yes. You are right, it includes shipping and taxes. But can you tell me how much taxes you have to pay on average in the US? According to Wikipedia "California has the highest state sales tax with a base rate of 7.25%". Here we have 27% taxes and the reason for it is that governments have to support free healthcare, schools... All I'm asking is that: Is it worth to have this?

In the province of Quebec, the sales tax is total of: 14.975%, and we have ~40-50% tax on your income, depending on how much you make a year.

Yes, in California.  Homes are ridiculously expensive, income taxes are high, electricity and water are very expensive, toll bridges/roads/lanes everywhere, no lights on highways. no/few street lights on residential areas beside both areas that pays an additional fees for such service, private schools are very expensive, no public health care, etc. The price might be lower in the end, and wage might be higher, but your standard of living is about the same, if that makes sense.

 

It depends. Personally I enjoy free health care, I enjoy the fact that my parents that has no money for retirement and will probably work for the rest of their lives, might a few years that they can live mostly independently thanks to government support, I enjoy the fact that my roads are safe at night, I enjoy that my neighborhood is safe at night, I enjoy the headache free, decent public transport service that we have, where we have a robust network of buses, metro (underground subway), that are mostly nice looking and clean, safe, and simple to use as it is governmental, I enjoy electricity rates of virtually free, I enjoy tap water that is better than bottled water for free. I enjoy the great nice looking and well maintain parks, I enjoy a well established rental board system keeping rental apartment rents in check, and providing a solid system to protect those who rent, I enjoy the fact that if someone lack education and want to pursue it further to get a higher degree, we have "Adult schools", that provide solid, free, programs to help adults get to where they want to go, while they work and take care of their family, as the program is adapted to such environment, we have a minimum wage that doesn't bring figures out ones ass, or too little. It follows inflation... the many things you just don't have in the US.

 

 

[Canada EH]

1 hour ago, GoodBytes said:

The reason for this is that sales taxes varies from the state/province and even city you are in. It's complicated, so they don't include it.

You are right but there is not a tax on the city level when it comes to consumer goods. Now the prices themselves will be higher in certain places like tourist hot spots, remote area's, even in not so remote places, just places where the retailers got you by the balls, like 100km away from a metropolitan city. Quebec is different in a lot of aspects, but city level additional taxes I got no clue for Quebec. Alberta has a 5% Government Sales Tax, then there are extra's for bottle deposits and an enviromental fee for lots of products from drinks to tires, to appliances.

 

Go over one province into BC and many other provinces, they have additional government taxes called Provincial Sales Tax, so now for a $1.00 item you are paying $1.15 instead of $1.05, so buying a new vehicle, its wise to save 10%.

 

European Union has Value Added Tax or VAT, whatever rate that is.

 

As for the pricing game, and yes it is a game its a psychological game, $1.99 or $2.00 type of game. But what comes to mind is when you buy a vacation package, they might say $499 for a 10 day cruise, but in the fine print the extra fee's are an additional $250. Same goes for airline flights. Another game retailers play is advertising a product for cheap just to get you into the store, and yet they only had like 5 apples for $0.01 but since you are in the store and you are hungry you are going to spend $100 on other things you never planned on getting.

 

There are other differences as well. The exchange rate is different and changes everyday.

Things in Canada cost more then in the USA things like tires, otc medicines even with the exchange rate factored in.

 

One final note while I am waiting is that online shopping is the ultimate game retailers play, because not only are you paying for an item whether it be a good price or not, sometimes you pay for shipping but if its coming in from outside your country you may also be dinged with customs and duty charges, or the shipper may fuck you over like Fed Ex.

[asus killer]

1 hour ago, BenM98 said:

Here we have 27% taxes and the reason for it is that governments have to support free healthcare, schools... All I'm asking is that: Is it worth to have this?

isn't that more a political issue, then a tech one?

[Canada EH]

Taxes pay for many other things, like repairing potholes, building bridges, city transit repairs and expansion, salaries for transit employee's, parking maids the list is very long.

 

The thing is, if you dont like it, one can always move to another country. And guess what, yes you got it, they got taxes there too.

Some countries charge a tax that is 100%+ of the price of the goods that are being imported.

 

Only way to bypass consumer tax, is to buy within the country.

[asus killer]

taxes should also be viewed globally, as in how much actual total taxes a person pays in total, not just VAT, there are measurements for that. There are property taxes, income taxes, purchase taxes, etc..

 

If you look to quality of life the US is below several European countries, that has a cost. The US ranks low in healthcare, in education, etc...

 

also vat are proportional to what you buy, so the more you buy the more you pay, so some people say it's much fair then the income taxes, which is also higher in the US then in some European countries

 

Also the US has gigantic deficits, 1 trillion or some insane number like that, so it's easy to have low taxes if you spend more then what you get in taxes, but that will have to change eventually

[GoodBytes]

1 hour ago, Canada EH said:

You are right but there is not a tax on the city level when it comes to consumer goods.

Yes there is. Here is an example:

https://www.avalara.com/taxrates/en/state-rates/illinois/cities/chicago/

 

[LinusOnLine]

Prices on tech in Sweden actually went down when we joined the EU. Before the stores had to buy tech from Swedens general agents for the tech equipment wich basically meant they could set whatever price they wanted. Now the stores can buy stuff cheap from other countries in the EU so that was a win. As soon as you buy something fom outside the EU you are hit with sale tax, customs fee's and import fee's so it can get really expensive to buy things from Amazon US for example. If it gets checked by customs its bad. Prices are higher than they are in the states but the volume they can sell are also smaller so it is not that bad to be honest.

[Canada EH]

1 hour ago, GoodBytes said:

Yes there is. Here is an example:

https://www.avalara.com/taxrates/en/state-rates/illinois/cities/chicago/

 

Ouch!

 

Move just outside the city limits and your good to go.

[Canada EH]

1 hour ago, asus killer said:

There are

Fuel Taxes

[PeterBocan]

Well, first off, I think the most of it was Apple that came up with the idea of 1 $ = 1 euro, which works well for Apple and other companies just copy it. I never saw this policy before Apple. So way back when iPhone was 499$ and EUR/USD was 1.4 it shoud've cost a European about 40% less, but it never did. Apple set prices for Europe the same way and they made billions out of it. Other companies followed. Fucking wonderful, IMO.

 

[GoodBytes]

54 minutes ago, Canada EH said:

Fuel Taxes

Well it is part of transport fees at this point, but yes

[Sakkura]

25 minutes ago, PeterBocan said:

Well, first off, I think the most of it was Apple that came up with the idea of 1 $ = 1 euro, which works well for Apple and other companies just copy it. I never saw this policy before Apple. So way back when iPhone was 499$ and EUR/USD was 1.4 it shoud've cost a European about 40% less, but it never did. Apple set prices for Europe the same way and they made billions out of it. Other companies followed. Fucking wonderful, IMO.

 

1 $ = 1 € is advantageous for Europeans now though. The VAT rate in most of the EU is bigger than the exchange rate difference.

[PeterBocan]

Just now, Sakkura said:

1 $ = 1 € is advantageous for Europeans now though. The VAT rate in most of the EU is bigger than the exchange rate difference.

No it's not until 1 $ > 1 euro. And that's the point.

[Sakkura]

1 minute ago, PeterBocan said:

No it's not until 1 $ > 1 euro. And that's the point.

Yes it is. VAT is included in the European price tag, so you have to subtract that before you compare to US prices.

 

So with a 20% VAT rate (or higher), you're getting a better deal paying €1 than an American is when paying $1.

[velocityx]

1 € is worth more than 1 $.

 

so an Iphone X or XS that costs 999 dollars in the US, ends up 999 euros.  Apple is charging 1134 dollars for one Iphone XS sold in Europe, than you add VAT. I have no idea what math you're doing when you say you're getting a better dea payingl €1 than an American is when paying $1.

[Bouzoo]

On 10/21/2018 at 11:05 PM, Sakkura said:

Yes it is. VAT is included in the European price tag, so you have to subtract that before you compare to US prices.

 

So with a 20% VAT rate (or higher), you're getting a better deal paying €1 than an American is when paying $1.

That is untrue and simple math proves it, quite easily so. 

 

iPhone XS - US $999 / Croatia 9.999 HRK ($1.527 / €1.345) with 25% VAT / 7.999 HRK ( $1.222 / €1.075) without VAT

iPhone XS Max - US $1099 / Croatia 10.999 HRK ($1.679 / €1.480) with 25% VAT / 8.799 HRK ($1.343 / €1.183) without VAT

*I did not take decimal values in cents into account, they are negligible

 

It is the same for every other electronic in my country, we're in EU. It's literally for every other country in EU I've looked up electronics in, Germany, Austria and UK come to mind. It was mostly the same in Switzerland last time I checked there. We're not getting a better deal, we never have. Of course, there may be some exceptions here and there, but in the general situation, US is far better off than Europe. I have no idea how Denmark stands though so can't comment on that. 

 

[Sakkura]

25 minutes ago, Bouzoo said:

That is untrue and simple math proves it, quite easily so. 

 

iPhone XS - US $999 / Croatia 9.999 HRK ($1.527 / €1.345) with 25% VAT / 7.999 HRK ( $1.222 / €1.075) without VAT

iPhone XS Max - US $1099 / Croatia 10.999 HRK ($1.679 / €1.480) with 25% VAT / 8.799 HRK ($1.343 / €1.183) without VAT 

*I did not take decimal values in cents into account, they are negligible 

 

It is the same for every other electronic in my country, we're in EU. It's literally for every other country in EU I've looked up electronics in, Germany, Austria and UK come to mind. It was mostly the same in Switzerland last time I checked there. We're not getting a better deal, we never have. Of course, there may be some exceptions here and there, but in the general situation, US is far better off than Europe. I have no idea how Denmark stands though so can't comment on that. 

 

You are ignoring the whole premise for my argument. IF an item costs the same in € in an EU country as it does in $ in the US, THEN the Europeans are getting a better deal.

 

Your examples DO NOT cost the same in €. Blame Apple.

 

Let's take another real-world example. The 480GB Crucial BX500 currently costs $78.95 in the US. It can be had for 594 DKK in Denmark.

 

594 DKK is equivalent to $90.46. But that price includes 25% VAT. If you subtract VAT, the price is $72.37, ie. a little cheaper than in the US. And this was just picking the cheapest of the SSDs I would consider good mainstream drives, at the IMO most mainstream capacity point.

 

45 minutes ago, velocityx said:

1 € is worth more than 1 $.

 

so an Iphone X or XS that costs 999 dollars in the US, ends up 999 euros.  Apple is charging 1134 dollars for one Iphone XS sold in Europe, than you add VAT. I have no idea what math you're doing when you say you're getting a better dea payingl €1 than an American is when paying $1.

No, this would be AFTER adding VAT. Meaning the price without VAT is significantly lower.