Apple Australia Chief to Meet With MP Over Pricing Disparities

Blue Sun · Aug 19, 2011

Its true, Australians generally do get mauled when it comes to prices.

The Aussie dollar is stronger than the US dollar, and we still pay a significant amount more. Don't tell me the 10% GST is to blame. The Mac Pro for example in the US is $2499 USD, in Australia it is $2999. An extra 10% would take it to $2750, not $3000.

DrSD · Aug 19, 2011

Yep , Apple products are expensive in Australia .

Xe.com is a bit too nice when you check the prices, last time i changed (July 27th) 100 US dollars from official exchange in Melbourne got 84.50 Australian Dollars !

baddj · Aug 19, 2011

Its not just Apple its all Technology companies that are taking advantage of us. (ripping us Aussies off)

One of my sisters friends got a camera that was $600AUD and in the US it was only $395USD. That's a big markup.

Something i would like to see is the ACCC step up and start looking into this.

Anther one is software that you download look at Toast 11 $179AUD in the US its $79.99USD that's a 50% market.

Atrialkick · Aug 19, 2011

Even Sony too

Sony Nex VG-10 Camera is $1999 in US ( approx 1900 Au$)
AU$ 3699 in Australia.
they manufacture those in China and export to US and Australia. Sony is a Japanese company, why the heck is that difference?

teepzo said:
It is easy to look at international pricing in a simplified current exchange rate situation.

Currency moves quite quickly especially the Australian dollar, which is reported to be, one of the most traded currencies in the world.
As such trying to set a price on any one point in time is rather difficult.
Companies who import products into Australia will often use currency hedging. Now this adds cost. But Apple in the US would also probably use hedging for their products so its a wash.

This means that they can set a price at a specific time and hold that price for a number of months.
Not only do they get the benefit of a set price, the consumer also benefits by knowing that this is the price they will pay for the foreseeable future.

Those in Australia and other parts of the world appreciate the issues we have with petrol/gas pricing where the price varies daily.

Specifically Apple Australia tends to set its price when a new model is introduced. They prefer to keep this price the same over the time period until the next model is introduced. Now you may not agree with this strategy but it is a valid strategy, and who wants to buy when next week the price may go up or down. Also every other manufacturer does the same so to single out one in the middle of a product cycle is a little unfair.

Headline prices are not always the price that you pay. In Australia there are often 10% discounts offered on Mac products. Stores like Myer, Dick Smith and others do this often.

As well if you buy iTunes cards from local retailers, like target and Woolworths you will sometimes get discounts up to 33%.

Likewise in the US where we are comparing the prices to hardware can be discounted at greater than 10%. This tends to reflect the higher level of competition amongst retailers in the US.

We all know in Australia that retail competition is not as severe as in the US. But the purpose of this discussion we need to keep things simple by comparing local recommended prices rather than street prices.

Why? As we are comparing the strategies of the manufacturer versus strategies of the retailer. Retail strategies are affected by local cost structures as indicated above by other posters.

In Australia the rents and costs of retail are much higher than in the US, so to blame the manufacturer for this part of the costs is not real. So let us compare the costs of buying some Apple products in Australia from the Apple Store compared to the costs of buying the same product from the US Apple Store. Other manufacturers products like Samsung HP Cisco and more can be sourced cheaper in the US.

We also need to factor into the equation the local taxes being charged.
At the end I would also like to compare the costs of buying products via iTunes/App Store in the 2 countries.

As others have already indicated the Australian dollar has been fluctuating quite rapidly. A few weeks ago it dropped to less than parity from being 10% better value than the US dollar.

For the purpose of this argument I have taken the dollar at this point in time is being $1.04 to the US $1.

Mac mini US start price $599 plus tax (local and state)
Mac mini US start price $699 inc tax

In the US the tax rate varies according to where you buy. And yes this creates a little issue when comparing. Buy in Oregon, and there is no sales tax, buy in California and its around 9% plus.

You could say most Ozzies will visit California - as its the airline gateway, and the tourist preference for many.

But lets use the average for most of the US as being around 7%

This gives the price as being
599x7% = 641.
641/1.04 = 616
699-616 = 83
or 12% cheaper
And if we are being truly fair to Apple the Australian 10% tax vs 7% tax means they are "overcharging" by around 10%

I chose the Macmini base model as it's differential rate in % terms is greater, and also its a newer product and its under the $1000 limit for importing GST free.

Arguments like freight costs are hard to factor in. The products originate in China. But then I am sure Apple US gets a cheaper freight rate than Apple Oz, but have no idea what this impact is.

Now this also does not include the costs of currency acquisition. If using PayPal it's generally going to cost around 3 to 4% for currency conversion. Using my 28° MasterCard it's much less.

So the point being is 12% a rip-off of consumers. I guess that a personal view only an individual can consider.

In practical terms is this 12% saving obtainable should you wish to buy this overseas and shipped to Australia. Maybe if you are travelling to the US already it might be worth buying and saving 12%.

Personally I will be travelling to the US in the next few weeks and I have already rejected this idea on purely personal grounds. Why because I can purchase the Mac mini here GST free.

On the matter of iTunes purchases I have looked at buying iTunes cards in the US. The best discount I can find is around 10 to 15%. My latest purchase of iTunes cards here in Australia was $150 worth for $100 which is a significantly better discount. To me purchases from the iTunes Store are cheaper in Australia.

However buying books etc are far cheaper in the US. To blame Apple for this is incorrect. Local book publishers permit Apple to sell products based on a return that they dictate. The issue here was already decided by our federal government of which the MP discussed in the original post is part of, and local stores like Borders and Angus and Robertson been already affected.

I will still buy US iTunes cards purely to purchase books from the US store at a much cheaper rate, as well as Levi Jeans (50% plus saving)

algiris · Aug 19, 2011

nutjob said:
I think you're the one writing BS. You haven't got a thing to say except "BS", how convincing.

Hey if i see poo i know it's poo, not candy. Maybe next time you first read what you wrote.

nutjob · Aug 20, 2011

algiris said:
Hey if i see poo i know it's poo, not candy. Maybe next time you first read what you wrote.

You aren't writing anything. You're childishly calling my post names instead of actually presenting an argument. It makes you look really... really... clever.

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Adam's Apple said:
Actually Australia is a huge market for Apple and technology in general as we have the most stable economy in the world. So when the US goes under again (which it will) we may end up being one of the highest buyers in the world.

Also the exchange rate should reflect the price. I can buy from a UK store and they reflect real time currency changes. Apples a bigger company just being slack.

And i wouldn't import from the US as the US imports from the same place we all do - CHINA!

Its actually cheaper to import the goods here then the US and less distance - so why does it cost more if we are all ordering and getting a delivery from the same place?

I'm sorry but cost of living in australia in general has become a joke and the technology industry need to lead a change in a stable economy instead of a dead one.

If you think that a country of 20 million will somehow buy more product than a country of 300 million, even in a recession, then you need to go back to primary school and learn some maths.

Costs are not about shipping distances, it's about the cost of doing business in a country. Australia is a small market with larger overheads. For example, it will be more expensive to ship to Aus than to the US because the volume is much greater to the US. Economies of scale make Aus more expensive.

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hyungsup said:
Macbook Pro price in US = $1199
Macbook Pro price in EU = 1199 = $1,726.14 (According to xe.com just now)

pretax price for macbook pro in EU = $1,426.56

More than $200 difference....
I don't see why apple need to charge extra 200$ across the atlantic.
If I had extra $10000 lying about I would buy a ticket to new york.
Buy few macbook airs tax free.
and sell it at a modest price of $1500.
For few hours of work I can actually go to US for free
Governments should now accept major currencies for charging VAT.

There is no such thing as "tax free" in the US. Everyone pays tax and you can't get it back.

algiris · Aug 20, 2011

nutjob said:
You aren't writing anything. You're childishly calling my post names instead of actually presenting an argument. It makes you look really... really... clever.

The argument was presented 1 000 000 times. Price differencies go beyond currency exchange rate and VAT.

Do you know how much a base model iMac 27" i5 costs in my village? 5899 LTL - 2460 USD. Same Mac in the US Apple Store costs 1699 USD and with all taxes it will still cost under 2000 USD, right? So here you have it, 500 USD bonus for god knows what. And everything comes from China, and currency exchange rates do not fluctuate that much and VAT doesn't go up every day either.

We are all Apple customers, just some are more equal than others. And how that has anything to do with what market will bear? I'm Mac user and i won't switch back to Windows and buy a PC. I'm forced to accept this pricing or to look for other ways of buying cheaper and that is not easy (at least for me).

----------

nutjob said:
If you think that a country of 20 million will somehow buy more product than a country of 300 million, even in a recession, then you need to go back to primary school and learn some maths.

Apple doesn't ship to UK, or Germany- Apple ships to Europe. It's one big "country" and then it ships product to stores and to all countries it needs to be shipped. US also last time i checked had 50 states and all states have different laws and taxes and so on.

nervouk · Aug 20, 2011

@nutjob is right: it's whatever the market will bear and we Australians are well used to seeing prices significantly higher than in other countries, thanks to past exchange rates and the historic perception that Australia is an obscure & distant market that must pay a premium to enjoy the same goodies as the rest of the developed world.

Government can't, and shouldn't, legislate prices. That said, I hope that drawing some attention to the issue may guilt Apple into dropping them a little

me.2 · Aug 20, 2011

Really?

FlameofAnor said:
It's not just Apple products...... electronics in general are REALLY expensive in Australia. I had a friend not long ago buy a Samsung 24" HDTV and it was over $800 AUS. You could've gotten the same TV in the US for half that price. IF you're not a wealthy person, I don't see how you can afford those prices.

Where does your friend shop? I know prices are sometimes expensive in Australia but I think your friend was ripped off. HDTV's don't usually cost that much. I quickly just checked the websites of some of our bigger electrical stores and the most expensive Samsung HDTV of that size (it was actually 26") was $499. $800 would easily get you a good 40" TV.

MacbookSwitcher · Aug 20, 2011

Is this MP dim enough that he thinks Apple controls exchange rates and Australia's tax and tariff system? He even admitted that it's not just Apple, it appears to be all tech products. So how in the world is that Apple's fault?

He must be the Australian version of a Democrat.

jzuena · Aug 20, 2011

hyungsup said:
Macbook Pro price in US = $1199
Macbook Pro price in EU = 1199 = $1,726.14 (According to xe.com just now)

pretax price for macbook pro in EU = $1,426.56

More than $200 difference....
I don't see why apple need to charge extra 200$ across the atlantic.
If I had extra $10000 lying about I would buy a ticket to new york.
Buy few macbook airs tax free.
and sell it at a modest price of $1500.
For few hours of work I can actually go to US for free
Governments should now accept major currencies for charging VAT.

You might want to factor in the 8.875% tax rate in New York before implementing your get rich quick scheme. Unlike VAT, I don't think you can apply to get any tax you paid refunded when leaving the country.

Then you will have to cover the warrantee difference between the 1 year US and what the people you will sell to expect in Europe... you didn't think Apple was going to suck up that extra cost as well, did you?

captain kaos · Aug 20, 2011

nutjob said:
Wow, amazing that you can tell the future, but lets go by the current facts: the AUD usually trades in the 75-85 cent range, and like most financial assets tends to revert to the mean. If you think that resources will stay high (which is what is driving the AUD at the moment, along with higher interest rates), then I have a bridge to sell you.

This is just more typical winging Australians. If you don't like the prices then don't buy the product. Apple has every right to charge whatever the market will bear. The problem isn't Apple but Australians willing to pay higher prices.

Australia is a small market with higher costs than the much larger and more efficient US market, and Apple has to offer a fixed price against a fluctuating exchange rate so not surprising things cost more in Aus. The alternatives: import from the US, buy something cheaper, or emigrate. You can't legislate lower prices.

You need to seriously get a grip mate and actually look at the facts.

A small markets, what of, 22million. Yep, theres not point apple being here with only 22 million.

Secondly, the Aussie $ is, and will be for the foreseeable future, a strong currency, especially against your AA rated US $. Ask any invester, they are flocking over to the AU$.

Thirdly, it isn't right that a downloadable OS (lion) is US$29.99, but here is AU31.99, especially when our doller has been running past parity for most of this year, and probably will carry on doing so. what "extra" costs are there for us to download it?

Love · Aug 20, 2011

I find it genuinely impressive that this MP is actually bothering to do something here. It's great. I'm not sure of the pricing situation in australia, but it's sounding rather unfair to the Australian people. The sole job of a Member of Parliament is to cater to and bring attention to the needs of his or her constituents, and I admire Mr. Husic for taking this rather large step - it sure beats the laissez-faire-I-don't-care-type MPs we're stuck with here in Canada.

gnasher729 · Aug 20, 2011

Love said:
I find it genuinely impressive that this MP is actually bothering to do something here. It's great. I'm not sure of the pricing situation in australia, but it's sounding rather unfair to the Australian people. The sole job of a Member of Parliament is to cater to and bring attention to the needs of his or her constituents, and I admire Mr. Husic for taking this rather large step - it sure beats the laissez-faire-I-don't-care-type MPs we're stuck with here in Canada.

If you are not sure about the pricing situation, you could just check out the Apple US store and the Apple Australia store and compare prices, and then you could google for "Australia Sales Tax" and find that Australian prices include tax. And then you could just convert the prices and find very little difference.

codencis said:
Software prices are not. For a digital download of, say, Final Cut Pro X:

US$ 300 AU$ 320

True currency conversion (US to AUD): $ 288 AUD

Australian prices include 10% tax. US prices don't.

Just curious, since the Australian Dollar hs become about 50% stronger compared to US$ in the last two years, have prices for Apple products dropped in the last two years?

teepzo · Aug 20, 2011

captain kaos said:
You need to seriously get a grip mate and actually look at the facts.

Thirdly, it isn't right that a downloadable OS (lion) is US$29.99, but here is AU31.99, especially when our doller has been running past parity for most of this year, and probably will carry on doing so. what "extra" costs are there for us to download it?

Hmmm sometimes its worth looking at your own comments. Ironically you take one of the most equal pricing examples of Apple to argue your case.

While the Ozzie is a strong currency, compared to previous years it is volatile. Being a $1.10 a few weeks ago then .99 and now at $1.04.

Taking it a $1.04 and including the GST which no doubt MP Bevis supports, we get a price of $A28.84 if I buy from the US (no GST)

Add the 10% GST and this now goes to $31.73 not that far off parity.

And then if I buy from the US, I dont get the interbank rate which we are so fond of quoting. I get the retail rate, which depends on what I use. Apple would get a corporate rate which would be better. But the banks still want some profit margin.

But lets move on, its our money, not Apple's that we are looking at, as that is what hurts us the most.

By buying from the US store I save 26c which is far better in my pocket than theirs. And if I wait until the dollar gets back to $1.10 I can save $2.00 as the 10% GST is offset completely by dollar difference (ignoring the loss on the real rate that I get from my bank)

So now I can buy from the US and save bucks, Apple doesn't stop me from doing that. Or if I want to be unkind, they cant effectively stop me.

But should I do this? To me no. So why would I as a rational consumer wanting to save money not do it?

Simple. From Oz I cant get access to itunes cards from the US with any discount, I've searched and found places like Costco in the US have cards at around 15% off, but I need someone there to buy it for me as they dont ship overseas. Now I have friends in the US, who can do this, but I wont.

Simple. I can get 30% off iTunes cards here regularly. So now my Oz price is reduced by another 15% over what I would pay in the US. Buying from Oz is then cheaper!!

As I said, very poor example to use to get a grip with.... LOL

Now music and other media is more expensive as others here have pointed out, and even with the higher discount rate the US is cheaper.

But who is the villan here. Apple or the content owner. Given that our parliament supported local content owners from grey market importers, logic dictates the common factor is the content providers.

entropys · Aug 20, 2011

teepzo said:
Hmmm sometimes its worth looking at your own comments. Ironically you take one of the most equal pricing examples of Apple to argue your case.

While the Ozzie is a strong currency, compared to previous years it is volatile. Being a $1.10 a few weeks ago then .99 and now at $1.04.

Taking it a $1.04 and including the GST which no doubt MP Bevis supports, we get a price of $A28.84 if I buy from the US (no GST)

Add the 10% GST and this now goes to $31.73 not that far off parity.

........
and other media is more expensive as others here have pointed out, and even with the higher discount rate the US is cheaper.

But who is the villan here. Apple or the content owner. Given that our parliament supported local content owners from grey market importers, logic dictates the common factor is the content providers.

Very good points here. With regard to hardware, once GST is excluded OZ prices aren't too bad at all. I would expect a small premium due to the small scale of the market, and most importantly, risk margin on dollar fluctuations. I would look askance if this risk margin approached 10 cents to the dollar though. I used to rail against the Apple Australia tax, but not so much these days.

The only thing Apple could be pinged on these days is iTunes prices. But these prices are set in large part by the local rights holders of music, film, books etc. Who are, ironically enough, protected by government fiat. In the digital world, these distributors, particulary of imported content, are becoming a ridiculous anachronism. And leeches.

If iTunes had the same price differential as the Mac App store I would be very happy.

So if I were Mr King I would be lobbying for the elimination of parallel content resictions, and the removal of local distribution rights for imported content. Won't happen of course, Mr King has to deal with these parasites to get content on iTunes. and as for Mr Hussy, his party is so far up the cloaca of the local music/film industry that any easing of these restrictions will not happen. I doubt the other side would do anything about it either.

nutjob · Aug 20, 2011

captain kaos said:
You need to seriously get a grip mate and actually look at the facts.

A small markets, what of, 22million. Yep, theres not point apple being here with only 22 million.

Secondly, the Aussie $ is, and will be for the foreseeable future, a strong currency, especially against your AA rated US $. Ask any invester, they are flocking over to the AU$.

Thirdly, it isn't right that a downloadable OS (lion) is US$29.99, but here is AU31.99, especially when our doller has been running past parity for most of this year, and probably will carry on doing so. what "extra" costs are there for us to download it?

Read what I wrote. Smaller markets have higher costs. For instance, there are lots of jobs at Apple where only one person is needed per country. In the US that job is divided amongst sales more than 10 times larger, so costs in Aus are 10 times greater. And the AUD has fallen from $1.10 to $1.04 lately and been as low as 99c, it headed. I actually trade currencies and make money. "And probably will carry on doing so" isn't a convincing theory and past performance doesn't predict future performance. Apple has to guess what the AUD will do and allow margin in their prices to allow for that.

cocacolakid · Aug 20, 2011

I understand the argument, and feel for people in other countries who are being charged much higher rates. The example an Aussie posted of the Mac App Store price of Toast 11 in the U.S. and Australia is alarming.

nutjob · Aug 20, 2011

algiris said:
The argument was presented 1 000 000 times. Price differencies go beyond currency exchange rate and VAT.

Do you know how much a base model iMac 27" i5 costs in my village? 5899 LTL - 2460 USD. Same Mac in the US Apple Store costs 1699 USD and with all taxes it will still cost under 2000 USD, right? So here you have it, 500 USD bonus for god knows what. And everything comes from China, and currency exchange rates do not fluctuate that much and VAT doesn't go up every day either.

We are all Apple customers, just some are more equal than others. And how that has anything to do with what market will bear? I'm Mac user and i won't switch back to Windows and buy a PC. I'm forced to accept this pricing or to look for other ways of buying cheaper and that is not easy (at least for me).

----------

Apple doesn't ship to UK, or Germany- Apple ships to Europe. It's one big "country" and then it ships product to stores and to all countries it needs to be shipped. US also last time i checked had 50 states and all states have different laws and taxes and so on.

Sheesh, you were better off when you were saying nothing. Prices are higher because the cost of doing business in Aus is higher and there is exchange rate risk. Simple as that. If you "won't go back" then you have to pay up, it's tough bickies really. It's still your choice.

aristokrat · Aug 20, 2011

Has anyone thought that maybe Apple (and other US, and even Japanese, manufacturers) might rather have this money back in the US instead of wasting away in Australia? Apple is already paying tax on dollars earned in Australia to the Australian government, and if they want to bring it back into the US they have to pay another round of taxes as well. Perhaps including a discussion of Australian corporate taxes and US import taxes as opposed to US corporate tax is relevant here, and might go a little further to explain the discrepancy. Further upon that, even after Apple pays Australian taxes and US import tariffs, Australian dollars are no good for investing in the US, so they have to be exchanged to US dollars, which also isn't free.

ThomasBoss · Aug 20, 2011

I hope that prices will get lower- I paid $1300 for my MacBook (that was on sale ) when in America it is $1200

SurferPup · Aug 20, 2011

MBA US$999 verse MBA AU$999 + AUS GST 10%

I have been watching the MacBook Air pricing pre and post OS X Lion released models and noticed that Apple did adjust world wide exchange pricing relative to the American dollar for revised hardware. Software is the same except iTunes single music tracks increased by 50 cents - maybe with iOS 5 released Apps, music and TV content will be adjusted down in line with our strong Australian dollar against the American dollar. I don't think Apple cares about some Aussie polly's opinion and rightly so as pricing is equal to American hardware. I am hoping Tony King sets our MP straight by suggesting the current Australian government remove the 10% goods and services tax or at least have a GST exemption for all Australian Apple Stores and Apple's online Australian store. Our MP needs to be accountable for his political party and not shift blame to large corporations.

mp1963 · Aug 20, 2011

Welcome to the UK

Our prices are equally silly for certain products.. Adobe especially seem to feel that charging stupid amounts is acceptable.. Australia has my sympathy on this one...

Jayse · Aug 21, 2011

Thumbs up if you read MP Husic as 'HP Music'

Jamekae · Aug 21, 2011

nutjob said:
Wow, amazing that you can tell the future, but lets go by the current facts: the AUD usually trades in the 75-85 cent range, and like most financial assets tends to revert to the mean. If you think that resources will stay high (which is what is driving the AUD at the moment, along with higher interest rates), then I have a bridge to sell you.

This is just more typical winging Australians. If you don't like the prices then don't buy the product. Apple has every right to charge whatever the market will bear. The problem isn't Apple but Australians willing to pay higher prices.

Australia is a small market with higher costs than the much larger and more efficient US market, and Apple has to offer a fixed price against a fluctuating exchange rate so not surprising things cost more in Aus. The alternatives: import from the US, buy something cheaper, or emigrate. You can't legislate lower prices.

You speak as if China will sprout wings and fly to Mars next Tuesday. The facts are that Australia's terms of trade are at favourable levels that have not been seen in thirty years and that they will likely stay at those levels as long as China continues it's strong economic growth - which basically every analyst concludes will be the case.

The inelasticity of the commodities sector Australia's strongest asset; even at astronomical prices, minerals will continue to ship as soon as they're extracted from the ground (and Australia's got a lot of them to give). Looking at that 75-85c average isn't doing anybody any favours, it's an archaic statistic formulated from an environment that's wildly different to Australia's economic playing field today.

Apple Australia Chief to Meet With MP Over Pricing Disparities

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