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Pricing: Apple Defies Australian Government 440

Posted by Unknown Lamer
from the higher-prices-down-under dept.
daria42 writes "This week it was revealed that Apple has still not responded to Australia's Federal Parliament on the issue of why the prices of its products are significantly higher in Australia than they are in the US, five months after the query was first raised by a member of parliament from Australia's governing Labor party. Apple has refused to issue a statement on the matter or even acknowledge the issue. What will it take to get Apple to open up — a national enquiry?"
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Pricing: Apple Defies Australian Government

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  • Retail Shipping... (Score:2, Insightful)

    by wsxyz (543068)
    Because even the inflated prices are still cheaper than buying from a foreign country and having it shipped?
    And Apple very cleverly takes advantage of that fact?
    • by Llian (615902)
      Wrong. I can buy in the US and get it shipped here and still save anywhere from 10-30%.
      go back and try again.

      The reason they charge it is because they CAN charge it. It is called the Apple tax on top of the Better Beaches'n'beer tax.
      • by Jeremi (14640)

        The reason they charge it is because they CAN charge it.

        OMG capitalism!

      • by wsxyz (543068)

        Wrong. I can buy in the US and get it shipped here and still save anywhere from 10-30%. go back and try again.

        Ok... it's because you are willing to pay more to buy the stuff in Australia rather than have it shipped from overseas.

      • by 1s44c (552956)

        Wrong. I can buy in the US and get it shipped here and still save anywhere from 10-30%.
        go back and try again.

        1. Buy ipads from newegg.com
        2. Get them shipped to Auz.
        3. Sell them
        4. Profit!

        If you can make a profit doing that you should be doing it.

      • by sumdumass (711423)

        Are you sure it isn't differences in licensing agreements from the RIAA's of the world?

        Apple fought tooth and nail to keep US prices low. But somehow I suspect that their deal mainly covers US sales and AU sales might even pass through another copyright royalties board before they can sell to you. This is different then buying in the US and shipping it because the sale is happening in the US in that case where it's happening in AU in the other.

    • by black3d (1648913)

      Digital online goods are generally priced at 200-400% the US domestic cost. It's got nothing to do with shipping. it's simply price gouging a smaller market, because the smaller market has no alternative.

  • by Rosco P. Coltrane (209368) on Friday August 19, 2011 @01:10AM (#37138632)

    Wouldn't you raise the price of your products if you had to sell each and every one of them with a Velcro pad to hang upside down?

  • by Beryllium Sphere(tm) (193358) on Friday August 19, 2011 @01:11AM (#37138636) Homepage Journal

    It costs Apple extra money to prepare products for the Australian market by turning everything umop apisdn.

    • Re:Increased costs (Score:5, Interesting)

      by BeaverCleaver (673164) on Friday August 19, 2011 @01:32AM (#37138728)

      That's very clever to have done that upside down thing with plain text.

      There are many products that are overly expensive in Australia compared with other countries. A few example based on the US market, which I'm most familiar with. I can buy a Leatherman at Walmart for about $60, or from a retailer in Australia for more like $200. A $25 cheap rifle scope from Walmart retails for about $60 in .au. Similar markups apply for other consumer optics - binoculars, small telescopes etc. Software, books, music, all these cost more in AUD than the equivalent in USD on the US market, even though the AUD is worth more.

      I support a general inquiry into price gouging like this, but limiting the inquiry specifically to Apple products seems like publicity whoring, or a ploy to make the problem sound more isolated than it really is.

      • by Wovel (964431)

        Food costs more in Australia than the US., just economic reality. Maybe the government should investigate that. Or why real estate costs several times morein Australia.

      • Re:Increased costs (Score:4, Insightful)

        by bug1 (96678) on Friday August 19, 2011 @04:02AM (#37139494)

        And when Aussies starting to buy stuff online, bypassing their overpriced supply chain, the retails say the internet needs to fixed to make prices match their overpriced ones.

    • by ghostdoc (1235612)

      Yeah, we can't stop laughing over here at what you lot are doing with our Ugg hats...

    • by Wovel (964431)

      Cool. This will not change the prices, but maybe Apple can help the Australian government understand theirneconomy.

  • by cactopus (166601) on Friday August 19, 2011 @01:17AM (#37138652)

    Why attack Apple for pricing products so they make the same profit in every market per person? There's no reason why a $39,000 Nissan 350Z (I had a 2008GT) should cost $67,000 AUD. Everything costs more over here. This is made worse now that the USD is less valuable then the AUD.

    I'd say the Australian government should be going after the automotive industry and many others to lower their prices and cost of living substantially. It doesn't cost that much to put a car on a boat and ship it. Japan to the US? (Low US price). Japan to Australia (shorter distance) (price almost double US model)

    • by Barny (103770)

      Not to mention ARIA and their cd price fixing in Australia.

      Maybe throw in the computer game industry and their insistence that top shelf games in Australia must cost $89 ($91USD).

      • And the rest - often-times games are marked at $109 or even $119 for the first few weeks. Exclusivity "tax" I suppose. Worse is Steam and the like, with price differentials despite no difference in the cost of sale.
    • by MachDelta (704883) on Friday August 19, 2011 @01:57AM (#37138850)

      If it makes you feel better, you're not alone in the price gouging stupidity.

      2011 Camaro 2SS MSRP:
      USA: $34,420
      CAN: $42,035 -> Adjusted: $42,437 USD
      Difference: $8000
      The kicker: The car is assembled in Oshawa, Ontario, Canada.

      So don't feel too bad, my upside-down friend. Us stupid Canucks can't even get shit we build in our own backyard for the same price as the Americans.
      All hail globalization... or whatever.

    • Re: (Score:2, Troll)

      by Noughmad (1044096)

      It's quite simple. The companies want to ship directly from China to Australia. However, the cheap Chinese workes only see "ship to AUS" and read that as "American United States". So every component has to go to America first. Once there, expensive, inefficient and union-protected workers have to unload it, load it again and finally ship it to Australia.

  • It's not just apple (Score:2, Informative)

    by Anonymous Coward

    It's not just apple that have significantly higher prices in Australia. I would love to buy an Alienware M17x laptop.

    Price in AUD $2499 (inc GST) = $2250 ex GST. Price in the US $1499. Given that the exchange rate is about 1 AUD = 0.97 US the comparison is ridiculous.

    The cost difference is about $800, I can fly from Sydney to LA for about a thousand.

    It's not just technology either - A Triumph Thunderbird Storm motorbike would be in my garage now if I could get one at a comparable US price. The US one is

    • by sumdumass (711423) on Friday August 19, 2011 @02:42AM (#37139144) Journal

      Have you ever stopped to think there might be hidden taxes in those prices? I mean either there is some AU import cabal sitting there making everything more expensive, or internal politics has taxed the items to some degree by either requiring a direct tax because of emissions, or warranty services or whatever.

      My neighbor purchased some English car and had it imported to the US. It cost him close to 6k US on top of shipping to clear customs and then another 3k to get an inspection and US title for it. Now that's an individual but I know there are things pertaining to companies like Ford has a motor that is more cleaner and efficient then anything they sell in the US (*at least as of a few years ago) but only sells it in Europe because some regulation and union or rights licensing contract prohibits its sale in the US.

    • by Builder (103701) on Friday August 19, 2011 @09:19AM (#37142164)

      But can you afford to fly back LA for your first warranty claim? Your second ?

      That's why instead, Dell have to put a support team on the ground in Australia for a far small customer base, pay local taxes, pay accountants to be familiar with local requirements and make filings, pay for space, communications infrastructure, warehousing, etc.

      And they do all of that to a fairly remote, fairly small consumer base.

      That's where a lot of costs come from.

  • Sales tax (Score:4, Informative)

    by gnasher719 (869701) on Friday August 19, 2011 @01:24AM (#37138684)
    In the UK, a huge price difference can be explained by 20% VAT added to the price, and cost of better consumer laws. Australia seems to have 10% sales tax and someone who knows might comment on consumer protection.

    And if one product is too expensive, people are free to buy from competitors.
    • by scdeimos (632778)
      The US isn't sales tax free. Many states have their own sales taxes layered on as well.
      • by lynnae (2439544)
        In the US, sales taxes are mostly not shown in the advertised price. Whereas VAT is mostly always already included in the advertised price.

        A $200 item in the states, purchased in a shop or online from a website with a B&M in the state you're shipping to, will cost $200 +x%

        A £300 item in the UK will cost... £300
      • by Tomato42 (2416694)
        But it's not shown in advertising. While in Britain (and most of EU AFAIK) price in advertising must include sales tax.
        • by dkf (304284)

          But it's not shown in advertising. While in Britain (and most of EU AFAIK) price in advertising must include sales tax.

          It depends on whether the market being sold to is mainly consumer or business. Prices for businesses are usually exclusive of VAT, whereas consumers' prices have to be what they actually pay. For most products, you don't see this in action because businesses tend to buy from different suppliers to consumers; about the only place where people notice it is with computing equipment and only at some stores (where both prices will be given, typically one in larger type than the other depending on the profile of

      • Re:Sales tax (Score:4, Informative)

        by w3woody (44457) on Friday August 19, 2011 @09:25AM (#37142240) Homepage

        Sure, but VAT is added to the posted sales price, while U.S. sales tax is added afterwards. So, for example, in Australia (with a 10% VAT), an iPad listed for $579 includes $52 in VAT as part of that price, with the base price of the product $526. In the United States, the posted price is $499, but then when you take it to the register they the sales tax--so if you were to buy your iPad in Glendale where sales tax is 8.75%, you get a receipt saying "$499 + 43.66 (tax) = $542.66."

        So posted prices in the United States are always significantly lower than posted prices in countries where the VAT is added to the price tag prior to sale, such as Australia or the U.K.

        Once you factor out that price, the exchange rate between Australia has fluctuated around 10%--from a low of AUS$0.9843 to AUS$1.105 per US$1. Because Apple tends to want a fixed price (and not adjust prices every time the exchange rate fluctuates) they fixed the price. And apparently it's only been within the last year that the U.S. dollar has been week against the Australian dollar.

        If you look at the price difference in the base price of the iPad, the price difference (US$499 verses AUS$526), this suggests the price was set at an exchange rate of AUS$0.9480, which is in-line with historic exchange rates until around September of 2010, when the dollar significantly weakened.

        There. I just answered the Australian Government's request for information. Phfffffffft!

    • by JTL21 (190706)

      Additional to VAT there are also import duties on many products being brought into Europe. The rate depends on type of product.

        I never see anyone factoring in import duty differences between US and Europe.

    • by AmiMoJo (196126)

      The 20% VAT claim has been used to justify ripping us off for decades, but the simple fact is that 20% is comparable to most western European countries, as are strong consumer protection laws. It also doesn't explain why something like a song or TV show purchased on iTunes is more expensive.

  • by 93 Escort Wagon (326346) on Friday August 19, 2011 @01:25AM (#37138690)

    From an article linked higher up in these comments:

    Ed Husic, the member for Chifley, called out Apple in parliament this week and demanded a broader inquiry by the Australian Competition and Consumer Commission into rampant price discrimination by technology companies in Australia.

    Video games are regularly 60 per cent more expensive in Australia, while we also pay hundreds of dollars more for laptops and in some cases almost double what Americans pay for software from companies like Adobe and Microsoft.

    • by cbope (130292)

      Agree. It's something you see commonly done by US companies, I see it all the time and Apple is partaking in this practice wholesale. Take for example a Macbook. Goes for $999 in the US. Same laptop in the EU? 999€, despite the fact the US dollar to Euro exchange rate is much stronger in favor of the Euro (currently ~45% stronger). Yes, VAT is included in Europe, but how do you explain the extra 20-25% markup? It surely isn't import duties. I say it's fat profits for American companies doing business i

  • Do Apple products go through the US to go to Australia, or are they shipped directly from Hon Hai in Shenzen, where they're made?

  • It seems that Apple usually prices in the local consumer protection laws when pricing their models abroad. For instance, the US, Japan, and Hong Kong dont have any forced warranties of sorts, and all those prices are, when taking taxes and whatnot into account, about the same. However, in places like Europe and Australia where the government pretty much forces companies to provide multi-year warranties with their products companies have to price that into their products. Those laws are nice, but stop pre
    • by Ecuador (740021)

      I can tell that for Greece, part of the EU with the 2-year mandatory warranties, Apple DOES NOT give you a second year. Yes, it is illegal, yes people have managed to fix their products by taking them to court, yes Apple products are more expensive here anyway. And yes, I am sure Apple is betting on fan loyalty to get away with this.
      If you can read Greek, for example you can see the 1 year warranty clearly stated e.g. here: http://www.plaisio.gr/Laptop-Netbook-GPS/Notebook/Laptop/Apple-Macbook-Pro-MC700GR.h [plaisio.gr]

    • Personally I would rather have the option of either buying the warranty OR taking a chance on my product not breaking(the vast, vast majority of them dont) instead of the government essentially forcing me to buy an extended warranty whether I want it or not. But of course maybe that is just me.

      I certainly prefer a simple statutory guarantee to a warranty with weasely fine print. As you say, the vast majority of products (from reasonable manufacturers) do not break so the cost of a statutory guarantee to t

    • by craznar (710808)

      And yes... that 2 year warranty on the software lasts as long in Australia as it does in the US.

      All the way until you take delivery.

      Paying twice the price for Dreamweaver download in AU vs US ... no excuses make that right.

      Not an issue for me... some how I got the upgraded bug fixes for free, no idea how that happened.

    • by cbope (130292)

      I disagree. The so-called "forced" warranties you quote are needed because companies have tried many times in the past to dump cheap crap on the consumer that breaks before it should. It does not increase the cost of quality, it means the company can't make crap that breaks easily and pawn it off on the unknowing consumer and then claim it's "out of warranty" when it breaks. When you buy something, you have a reasonable expectation that it will last X years. There is no reason a TV, computer or other electr

    • That's simply wrong, things with zero replacement cost like video games are still almost double the price in Australia to the US. Also the warentees they've tried to sell me in the US are far cheaper than the price difference between US and Australia for electrical goods.
  • Price gouging in Canada is not as bad as our southern friends, since it is a short drive to the USA border, but is still significant. My favourite gouge are recently printed books and magazines that show both the American and Canadian prices, with the Canadian prices 25-40% higher in dollar values, even through the Canadian dollar has been worth more than an American dollar for some time.

    It is justified, because Canada, Australia, and New Zealand have "small" markets, so they have to charge a premium for d

    • by xav_jones (612754) on Friday August 19, 2011 @01:53AM (#37138830)
      Part of the problem is that they are small markets and as such have less competition. All the people erroneously claiming shipping costs, government taxes and consumer protection laws just don't seem to have a clue about how companies fix their pricing based on what the market will bear (i.e. what they can get away with). And of course, this is the essence of capitalism. In the case of Australia, since the market is smaller there is less competition and some companies -- I'm looking at you Canon -- go to great lengths to keep their fat profit margins that they cannot sustain in other markets.

      Case in point, "the average price of a movie ticket in Australia for 2010 was AUD$12.98. In the United States, though, the average ticket cost just $US7.89 (approximately AUD$7.40)" [1]

      Having said all that, I don't mind the government looking out for it's people who are being priced gouged.

      Oh, and any American who thinks this kind of complaint seems a bit whiny (and are under the delusion that there is much a consumer can do about it) you all squealed like stuck pigs when your gasoline hit $4 a gallon for goodness sakes.

      [1] http://www.choice.com.au/reviews-and-tests/money/shopping-and-legal/shopping/cinema-rip-offs/page/do-the-math.aspx [choice.com.au]

      • by Namarrgon (105036) on Friday August 19, 2011 @03:05AM (#37139260) Homepage

        This is of course entirely true, and most of us have been simply importing instead (the UK is actually the best value source right now). We can usually save 30-60% by buying online & overseas, even after shipping (bypassing the 10% GST helps too).

        The problem with this is the local retailers are put in an impossible position. Their sales drop drastically, but their margins are already thin. All the excess profit on what sales they get go to the local distributor, or more often to the US publisher who sells to the distributor at an inflated price. The retailer could of course buy from overseas retail outlets themselves, import in bulk and still have plenty of room to undercut their peers (and some do), but this jeopardises their relationship with their suppliers (who frequently also sell things the retailer can't import so easily).

        Result: sales slide, the local economy suffers, and the publishers usually blame it all on Australians being a bunch of lousy pirates.

    • by black3d (1648913)

      Indeed, the same extends to most markets. Even for digital-only distribution items. It's not uncommon to see software in Aus/NZ priced at 3-4x the American cost, taking into account currency differences. Take the EA Origin store for example. Almost any software on it costs 3x as much to buy "down under", on the equivalent store (eg, EA Origin NZ store vs EA Origin US store).

      The common hillbilly reply to this situation is "well if you don't like it then make your own software!" Really? A company whose entire

    • by sumdumass (711423)

      Well, don't forget that for copyrighted works, there is often different laws to some degree across international borders and in some places, the copyright royalties requirements might be different.

      This is a reason why sited like Hulu which doesn't charge to view block some foreign IP addresses.

      So it's likely that it's a lot more complicated then it appears on the surface.

  • It's called price discrimination [wikipedia.org]. It means people who have more elasticity of demand pay a lower price than people who have less elasticity.

    This is how cars are priced differently through the negotiation process, why people pay different amounts for airline tickets, and until the recent advent of mass pricing, almost every transaction in the marketplace was a haggle.

    Price discrimination helps to maximize seller's surplus, thus making it profitable to serve those with more elastic demand with lower prices.

    • by cbope (130292)

      Not exactly 100% true, take pharmaceuticals for instance. I live in a country with a higher cost of living (and arguably better quality of life) than the US, but with MUCH lower pharmaceuticals costs. Yes, we have socialized healthcare, but I know for a fact the the _total_ drug cost is still significantly lower that even what the consumer pays in the US. Our co-pay is typically less than 10€ and there is even a maximum cap per annum, above which you pay nothing.

      At least in the US, you seem to be willi

  • Looking at europe prices are roughly 25% above the US prices.

    However I did not check recently as currency fluctuations may change this difference significantly.

    • by dkf (304284)

      Looking at europe prices are roughly 25% above the US prices.

      A fair chunk of that is probably due to different rules on where to put sales taxes on the bill (i.e., are they applied before the price quoted to you or after). You've got to compare what people are actually charged when they do a full purchase, not what price is advertised. Cross-jurisdiction comparisons are difficult.

      So only a 5–10% gouge. (Hard to say how much of that is due to currency handling issues. Probably not as much as all that; bigger volumes let you get better prices for that sort of thi

  • Out of touch... (Score:4, Insightful)

    by Wovel (964431) on Friday August 19, 2011 @02:38AM (#37139110) Homepage

    The cost of everything is higher in Australia. Locally grown food costs more in Australia then it does in the US. The US government per diem is 2.5x higher in Sydney than New York City. This is not because the US government wants everyone to have more fun in Sydney.

    How can they be so out of touch. It costs more to do everything because the cost of living is higher. Learn something about your own economy. Why should Apple be required to explain Australian economics to parliment. It is funny when Internet co mentors make these senseless claims. It is just scary when officials that should know better do it.

    • Re:Out of touch... (Score:4, Insightful)

      by Namarrgon (105036) on Friday August 19, 2011 @03:16AM (#37139316) Homepage

      Perhaps you could explain to AU iTunes customers how the cost of living adds 70% to the price of bits that happen to pass through Apple's servers before being sent here? There's no AU bricks-and-mortar or even AU staff required.

      In many cases, cost of living has nothing to do with it. It used to be that $1USD ~= $1.50AUD so Australian iTunes prices were set accordingly, then when the exchange rate levelled, the US executives chortled over the extra 50% profits they were getting for zero extra cost. So long as people keep paying it, they'll keep charging it.

  • Import duties are higher, VAT is added, currency fluctuations are accounted for by adding a preload cost adder, because they never make less than what they want, but sometimes have extra profit, and because they need to set up a foreign corporation to deal with Australian legal formalities and consumer laws. Not to mention a foreign organization to service all the products. The fact that it isn't double the US price means the US folks are already subsidizing the Oz purchases by giving a higher unit profit p
  • The elasticity of demand curve for Apple products peaks at a higher point in Australia than in the U.S. This is how all prices are set. Charge more and you lose enough sales to lose money; charge less and demand doesn't increase proportionally. Maybe remedial economy 101 for the labor party would also help them understand why there aren't any large, successful technology companies in Australia.

  • Have a look at the current pricing for VMware Workstation 7.1

    If you pay in US$, they want $189.00

    Currently AU$1.00 buys US$1.03 according to the TV, making that approximately AU$183.00

    Click on the pull down option on th VMware store to convert the pricing to AU$, it becomes AU$277.00 - a markup of AU$94.00 or approximately 50%.

    I've rung and asked them why the difference - and got some bulls**t about there being annual price adjustments based on the current currency conversion. The only problem is the l

    • by SQL Error (16383)

      I've rung and asked them why the difference - and got some bulls**t about there being annual price adjustments based on the current currency conversion. The only problem is the last time that AU$ was low enough for that was back in the 1980's.

      18 March 2009, actually. (Last time the exchange rate was greater than 1.5:1.)

  • Defiance strikes me as being relatively active. This seems very passive. I think "Ignores" would be a better description. Defiance also conjures up images of insubordination, which would imply that a single member of the Australian Parliament is Apple's superior. Again, I'm not sure it fits. [That's not a dig on Parliament, just how I see things. It's not like they're blowing off a direct subpoena from a governing body to which they submit.]

    In fact, the more I think about it, the more it sounds like some po

  • MP is not PM (Score:5, Informative)

    by 517714 (762276) on Friday August 19, 2011 @02:50AM (#37139188)
    The title of the story is inflammatory as this MP is NOT the Australian Government. Apple was justified in not responding. A member of Parliament has no standing to ask such a question with the expectation of receiving an answer.
  • Why are prices higher in Australia than the United States? Because it's a very small market. The entire population of Australia (22.5 million) is only somewhat more than the population of the York York City metro area (19 million). Plus extra shipping and handling costs. It's the same problem that we have here in Canada. Despite being right next door we frequently pay somewhat more for products than they do in the USA.

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