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Apple Bumps UK Prices as VAT Rises

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Apr 12, 2001
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Popular iOS devices have also increased in price, with the 16 GB iPhone 4 rising in price from £499 to £510 and the 16 GB Wi-Fi iPad going from £429 to £439.



210338-apple_store_uk_vat20_new_500.jpg


Apple's new entry-level UK pricing

Apple today took down its online store in the UK for a few hours, moving to raise prices to account for an increase in the national value-added tax (VAT) going into effect today that is seeing the rate rise from 17.5% to 20%.

The price increases have resulted in Apple straying from its usual price point targets, as an entry-level 13" MacBook Pro or 21.5" iMac that previously cost £999 with VAT now goes for £1020, while the entry-level Mac Pro price has moved from £1999 to £2041.

Popular iOS devices have also increased in price, with the 16 GB iPhone 4 rising in price from £499 to £510 and the 16 GB Wi-Fi iPad going from £429 to £439.

Some observers had hoped that Apple might choose to simply absorb the tax increases by reducing their prices slightly in order to maintain the psychological price points used for many of their products, but the company obviously decided that it needed to pass along the tax increase to consumers in order to maintain its margins.


210339-apple_store_uk_vat20_old_500.jpg


Apple's old entry-level UK pricing


Article Link: Apple Bumps UK Prices as VAT Rises
 
Article Link
https://www.macrumors.com/2011/01/03/apple-bumps-uk-prices-as-vat-rises/
Last edited by a moderator:
That's unfortunate I guess?
Like we don't pay enough for Apple products..
 
Wow, VAT is ridiculous! 20% is crazy. read studies that VAT didn't help maintain a lower overall cost of taxes as "theorized", the money was just spent by the politicians anyway. No wonder so many Europeans come to the USA for shopping trips and smuggle their purchases back in :)
 
20% VAT is crazy high. No wonder people in the UK try to buy products via the underground.

JohnG
 
Some observers had hoped that Apple might choose to simply absorb the tax increases by reducing their prices slightly in order to maintain the psychological price points used for many of their products, but the company obviously decided that it needed to pass along the tax increase to consumers in order to maintain its margins.
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lol.

Thanks a lot LibCons :rolleyes:

I really can't wait to emigrate.
 
Sigh. It would have been nice if they had absorbed it, particularly given their high profit margins compared to other companies, and trying to keep the pricing simple. But oh well - it's not the end of the world, and I certainly would be any less put off by buying stuff for a tiny percentage. Sith happens.
 
jetlife2 said:
Sorry for UK consumers, but there was no need for Apple to absorb somebody else's tax increases as lower margins.
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Except for the fact that pre-VAT, Apple prices are higher in the UK than the US after currency exchange. In a sense, they are already making higher margins in the UK than the US and that is an incessant source of whining by our British folk on the forum.
 
And our politicians in America wants the same kind of VAT taxes. Value-Added, indeed. :rolleyes:
 
This summary should have been:

"UK raises their tax rate. Apple keeps prices pretty much the same. Now debate the VAT on our forums, since we're trying to throw up pretty much anything on the front page in order to drive traffic."
 
Last I checked, UK prices (without VAT) are higher than US prices (without Tax) but a noticeable margin. Now I know Apple is not charity nor are they known for affordable products. But couldn't they just have absorbed the cost?

This may come back and bite them in the arse.
 
swingerofbirch said:
Are retailers required to advertise the price with tax?
Click to expand...

Yes

I don't know of anywhere that happens in the US except vending machines, but maybe that's because we don't have national sales tax.
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The US situation is both good and bad. Good, because it reminds the customer how much tax they're paying - and that keeps politicians in check. Bad, because it's annoying to have to keep working out how much you'll have to pay.

jav6454 said:
Last I checked, UK prices (without VAT) are higher than US prices (without Tax) but a noticeable margin. Now I know Apple is not charity nor are they known for affordable products. But couldn't they just have absorbed the cost?

This may come back and bite them in the arse.
Click to expand...

I think a lot of retailers will just swallow the increase.

Apple do overcharge us (looking at the before VAT price) but our consumer rights are better than in the US and that does add to their cost. Effectively we can demand the repair or replacement of a product during it's natural life if it breaks due to a manufacturing defect... and that gives us some of the benefits of extended Applecare 'for free'.
 
KnightWRX said:
Except for the fact that pre-VAT, Apple prices are higher in the UK than the US after currency exchange. In a sense, they are already making higher margins in the UK than the US and that is an incessant source of whining by our British folk on the forum.
Click to expand...

The UK prices (based on a spot check) are 5% higher than the US prices when factoring out VAT. This premium covers GBP/USD currency hedges, be they internal or external contracts. It may also cover some import duty, but I don't think that is a significant contributor.

Currencies are volatile, and companies need to reconcile against the different currencies of their income, expenses, and reporting countries. Fortunately, they aren't that volatile, and a 5% spread will cover most of what happens in a product cycle so there is no need to regularly adjust prices.
 
aaarrrgggh said:
The UK prices (based on a spot check) are 5% higher than the US prices when factoring out VAT. This premium covers GBP/USD currency hedges, be they internal or external contracts. It may also cover some import duty, but I don't think that is a significant contributor.

Currencies are volatile, and companies need to reconcile against the different currencies of their income, expenses, and reporting countries. Fortunately, they aren't that volatile, and a 5% spread will cover most of what happens in a product cycle so there is no need to regularly adjust prices.
Click to expand...

Debate that with UK residents that find the practice somewhat disheartening, I was simply providing you with facts, which you seem to agree with seeing how you didn't debate them.
 
jav6454 said:
Last I checked, UK prices (without VAT) are higher than US prices (without Tax) but a noticeable margin. Now I know Apple is not charity nor are they known for affordable products. But couldn't they just have absorbed the cost?

This may come back and bite them in the arse.
Click to expand...

Can't speak for Apple, but I know in software we price in Europe higher because the cost of sales is higher. Plus we have to account for fluctuations in currencies so prices are padded. Now, I'll also say in past companies we also raised prices in some countries because the market will bare it and the channel partners want the higher price so they make more margin. It's a more complex than just taking a 1 for 1 price exchange. Just pointing it out... still doesn't make it fun for the UK and other countries.
 
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