Prices for USA. Prices for Europe. Fight the power!

[Kord]

I've been thinking of buying a new 8800GT video card, and I once again found myself asking, "Why does stuff cost so much more here?". Theses cards are about £120-140 in the USA and £160-180 in the UK. The official nVidia press releases quotes prices of $199 to $259 for USA and €199 to €259 for Europe. And today's rate means $199 to $259 is actually €135 to €176... so right off the bat they're building in a massive 47% price hike for the EU!

When is a dollar, not worth a dollar?
Ah, that classic cliché company response... "freight, shipping, support costs, higher wages, blah, blah, etc, etc".

Anyway, here's a simplistic breakdown of US vs. UK pricing for some video cards. I've only used 17.5% VAT. Apparently there's no UK import duty on computing gear, and this EU import tariff page specifies zero tariff on computer parts.

Sept/Oct typical low retail prices for an nVidia 8800 Ultra were...

• $600 in the USA ( ~£285 )
• £400 in the UK ( £340 + VAT )
• Price difference between USA and UK : £55

That price difference is what companies claim is the "extra cost of bringing the product to the European market". If that were true, then how do they explain this...

Sept/Oct typical low retail prices for an nVidia 8600GT...

• $120 in the USA ( ~£57 )
• £70 in the UK ( ~£59.50 + VAT)
• Price difference between USA and UK : £2.50

And typical low prices for an ATi Radeon HD 2600XT...

• $100 in the USA( ~£48 )
• £65 in the UK ( ~£55 + VAT )
• Price difference between USA and UK : £7

All three products are almost identical in size, shape and weight. The 8800 Ultra shipping weight is 500g heavier, at 1500g. All three cards are fairly new to market, so I presume all three cards are still being manufactured in factories. And packed. And shipped to their destinations. They're selling in the USA and UK, and presumably making a profit for all companies in the supply chain.
So, exactly why did they add £55 to the high-end card price? I think it's simply because they can get away with it... or, to be more precise... because we pay it.
iTunes pricing in Europe

Anyone else got comparisons of exorbitant UK/EU overpricing of stuff?

Do you guys in retail have any insight into what these big companies are thinking? Any ideas on what might inspire them to have fairer pricing structures? Although, "fair" seems like an unlikely quality for some of them... especially since they did it again

[IBM]

I was thinking about this earlier this morning, taking the Adobe pricing structure as my example.

For something like software - especially considering the sheer number of people who were bitching about the crazy pricing involved - next time around people should hold off three or fours days before buying it. It's not going to make a difference to the bottom line, but it'd sure give Adobe a shock if no-one bought a copy on the release date, maybe give them pause for thought.

[Choo Choo]

How about Call of Duty 4 on Steam? $49.95 for the US, $69.95 + tax for europe.

Why should something have different costs when it's digitally distributed?

[alsenior]

i think shipping cost are really a null point because it all comes from china anyway. it maybe cost and extra £2-3 to get it to europe when there palletised. so thats a moot point.

[davidcrofter]

Edit sorry wrong thread.

[dancingmatt]

Originally Posted by Choo Choo

How about Call of Duty 4 on Steam? $49.95 for the US, $69.95 + tax for europe.

Why should something have different costs when it's digitally distributed?

Yeah, this really surprised me too. Why the hell will I pay $69.95 for COD4 when I can buy it retail for what, £20?

It makes absolutely no sense

DM

[UltraMagnus]

with all those examples... did you buy it anyway?

if so, thats why, because they are companies and they can.

[Andaho]

The true reason isn't because of extra shipping costs to bring them to europe, it's due to economy and the market. In the USA there is more market, especially for internet sold merchandise. Because there is more market, there is more competition which drives the prices down - shops like newegg for example in the states will have far far more customers than scan for example in the UK. Also different countries have a different ecconomy - e.g. for example, on an average hourly wage in the UK you could buy 10 loafes of bread. However, on an average hourly wage in Romania, you might not even be able to afford one loaf of bread. I know that's an extreme example, the it's to do with the market and the economy. Perhaps IT retail and distribution people in the USA get paid a lot less than IT retail and distribution people get paid in the UK.

EDIT-----

Looking back on the original post; It's also to do with culture... in the UK we are prepared to pay more for the latest and greatest technology, and our technology market thrives on that. Also, if the distributor is buying higher priced items, they want to get a higher % profit for their greater investment. It seems obvious to me really; We have a stronger economy compared to the USA... we get paid more, but the cost of living and buying products is higher.

[Kord]

Tom's Hardware did a great article, The World's Best Hardware Prices.

"Finally, we decided to include a high-end consumer product. Our choice was a 2-GB SD memory card ...<snip>... While you can get this product for as little as $27 plus value-added tax in the United Kingdom, you'll have to pay at least $38 in the United States or $50+ in Canada or Australia"

"Cost for a Core 2 Duo E6850 processor or a GeForce 8800 GTS graphics card was very much balanced"

For me ( hands-up biased ), that article demonstrated pricing is based on the "what can we charge" factor, and the "how must does it cost to sell" factor is relatively insignificant. Prices in the article are quoted without taxes/tariffs, so nobody can use the well-worn excuse of "government taxes/tariffs increase prices".

Originally Posted by UltraMagnus

did you buy it anyway? if so, thats why, because they are companies and they can.

Originally Posted by Andaho

in the UK we are prepared to pay more for the latest and greatest technology

Exactly. If people stopped paying the high prices, the prices would drop. That's a market economy for ya! Prices are high because people keep them high. We can only blame ourselves.

Originally Posted by Andaho

In the USA there is more market, especially for internet sold merchandise. Because there is more market, there is more competition which drives the prices down

More market? Probably. More competition? I doubt it.

We're talking about technology products from large companies. Who sells to the USA exclusively? I hate to get all "conspiracy theory" here, but maybe when thinking about pricing, people should consider the other factors, such as price-fixing , artificial shortages, and various other price inflation techniques. After all, price-fixing isn't illegal in a lot of countries, and we are talking about global entities here.

Originally Posted by Andaho

Also, if the distributor is buying higher priced items, they want to get a higher profit for their greater investment.

I think distributors and retailers are the first to get hit with the price discrepancy. It's the manufacturers doing that. I imagine from the distributor level down, a standard margin is added to products. For the most part, distributors and retailers get stung just as badly as us, the consumer... the exception would be during shortages... which is when they engage in the practice of price-gouging ... 8800GT anyone?

Anyway... that's a market economy. The underhanded tactics companies use to inflate prices simply wouldn't work if people refused to buy the goods. Or, to put it from the perspective of a stockholder... they're doing a fantastic job!

Ah, well. Maybe this will all change when all Euro nations have more disposable income. After all, the Euro market is over 700 million, compared to 300 million in the USA. Some day they'll realise... low margins equal massive sales.