Apple Bumps UK Prices as VAT Rises

[None Such]

This thread is disheartening because there are shades of xenophobia on both sides. I mean who is voting positive? Perhaps the 'positive' button should have been replaced with 'schadenfreude' for this thread?

All I'd say to those outside the UK, in the US especially, is (to repeat a point which has really already been made) that I think the disappointment at Apple raising the prices in line with the VAT rise is not because we think Apple should absorb the tax out of some misguided sense of entitlement, or even because the products have high margins and arguably high prices to begin with, but rather because there was already a disparity between US pre-tax prices and UK pre-tax prices. This disparity has been attributed to vague things such as 'the cost of doing business' and suchlike, and to having a bit of leeway for fluctuations in the exchange rates, much of which I personally think sounds like a bit of a fudge that whilst maybe having some basis in reality doesn't explain the situation fully.

So I don't think it's that we think Apple should be paying our taxes for us - just that the tax rise exacerbates an existing perception of overall overpricing. Apart from anything else, I don't think it's good for Apple to have a load of silly-looking prices in their store, it's very inelegant and un-Apple like. Even if they rounded some of the figures up and down it would look better... Again, the AppleTV at £101... it's just daft.

I'd not be laughing at American Apple customers if they got hit by some increased sales taxes, I think it's sad that some here seem to think we're a bunch of proto-commies who deserve what we get. It isn't the 1780s anymore, we're supposed to friends now!

Out of all that I didn't see you once putting the blame where it belongs. It looks like politicians have a winner in VAT.

 

[irun5k]

The healthcare received over the NHS is completely "free"; you don’t pay any of your personal money for hospitalised treatment. Instead you pay the money you allocated for tax, and not for personal things. Even then, it still works out considerably more affordable (and dare I say better) for treatment here, so there’s no need to pull the "healthcare isn’t free" card.

I respectfully disagree. You pay for it with every purchase you make, every day of your life. Nothing is *free*. I suppose you could argue that someone who receives medical treatment in the UK but has somehow avoided ever paying VAT is getting it for free, but in that case the cost is simply being covered by someone else.

Applying your logic, my salary is money my company sends me for "free" every month. Especially since I am not hourly- I make the same whether I'm on vacation or whether I'm working 80 hrs a week. Likewise, my rubbish pickup is "free" (included in my property taxes) and people come and fix the potholes in the road in front of my house for "free" (taxes, again.)

In the Soviet Union, life was grand. Everything was *free*.

 

[None Such]

This must be a really slow news day when we're talking about taxes. yuck

 

[Queso]

This must be a really slow news day when we're talking about taxes. yuck

I don't know about the USA, but here in the UK we file our tax returns in January so it's sort of on everyone's mind

 

[0098386]

Then I'll continue to buy my iPods from Amazon.

 

[Waragainstsleep]

I have to agree with the previous poster; I don’t remember Apple dropping their sale prices when the VAT rate was dropped to 15%. I could be wrong, but I really don’t remember this.

The reason you don't remember this happening is because it did not coincide with the lowering of the VAT. Apple waited several weeks (possibly months) before they lowered their prices accordingly. And yes, again they were making the extra 40p here or there by rounding up or down.

Funny how they act so quick to put the prices up though huh?

The other thing they did was put their prices up the second the world announced it was going into global recession. Other vendors of various products have adjusted their prices to encourage spending and while Apple have obviously not discouraged it with this policy, one cannot help but feel its about time they did us Brits a favour. We don't expect to get products before the US, but its not very fair to sting us with such a price hike. While our customs charges are ludicrous, I doubt they would account for £50-100 a unit and as mentioned, Apples publicly stated reason regarding exchange rates is just a load of BS.

 

[yg17]

If you can't afford the extra 20 quid, perhaps you shouldn't be spending £1000 on an iMac.

This is the quote of the year so far!

Where do you think the extra £200 on a £1000 purchase is going? Might it be funding your so-called free _______?

Here's the difference. I live in the US. I pay for my health insurance out of each paycheck. If I get sick and wind up in the hospital for awhile, I'm still going to have hundreds, if not thousands of dollars in out of pocket medical expences. In the UK, you pay for your health insurance via taxes, but if you get sick, you don't owe an extra penny - err, pence.

 

[OllyW]

but if you get sick, you don't owe an extra penny - err, pence.

Penny is correct.

 

[charlituna]

Wow Eric, what a deceptive and hit fodder headline. I thought he was better than that.

Apple didn't raise anything. The higher cost is 100% due to the higher VAT. In the UK, since the taxes are the same everywhere (unlike in the US), prices include the VAT. So when you pay 1000 pounds, that is what you pay, not 1000 pounds plus taxes which might really be 1200 pounds. Apple is just following that form

 

[Bodypainter]

Love the way the 2.5% tax rise ona £25 ipad accessory is exactly £1 (ie. camera kit now £26) where as my calculator makes 2.5% of £25 to be 62 pence, so Apple are making an extra 38 pence from the VAT increase - Very cheeky, but then again why would they want pocket change when they can deal in round pounds

could we say that apple isn a greedy company? who would agree with that?

 

[ArcaneDevice]

Wirelessly posted (Mozilla/5.0 (iPhone; U; CPU iPhone OS 4_1 like Mac OS X; en-us) AppleWebKit/532.9 (KHTML, like Gecko) Version/4.0.5 Mobile/8B117 Safari/6531.22.7)

And this is yet another reason as to why I am emigrating to the USA as soon as I'm out of uni.

Why? You think because you don't pay an extra couple of hundred on a Macbook that living in the US will save you money?

US sales tax is charged on daily items like food at varying rates unlike VAT. So what you save on Apple products that you might buy once a year the difference is made up with everything else you buy.

Not to mention the multitude of different areas that require tax and paycheck withdrawals that the UK doesn't have to consider.

Going to a store and having to calculate the price of something on top of the price tag is stupidly convoluted.

 

[zin]

I respectfully disagree. You pay for it with every purchase you make, every day of your life. Nothing is *free*. I suppose you could argue that someone who receives medical treatment in the UK but has somehow avoided ever paying VAT is getting it for free, but in that case the cost is simply being covered by someone else.

Applying your logic, my salary is money my company sends me for "free" every month. Especially since I am not hourly- I make the same whether I'm on vacation or whether I'm working 80 hrs a week. Likewise, my rubbish pickup is "free" (included in my property taxes) and people come and fix the potholes in the road in front of my house for "free" (taxes, again.)

In the Soviet Union, life was grand. Everything was *free*.

Fair point. What I was trying to get at is that you don’t have to pay anything up front; the NHS won’t try and rob you of thousands of £££s for an operation or some other treatment (since you’ve already paid your share for the healthcare system in the form of taxation).

Another example; when council employees come around and collect recycling material or rubbish, they don’t ask for money specifically for that pick-up, since you’ve already paid your fair share in both taxes (which are sent to local government budgets) and local taxes (e.g. if you pay tax for local county councils). Yeah, it’s not free (far from it), but the amount you end up paying for those respective services, in the form of taxation, contributes to a share of the cost, and not the cost in full.

I probably should have been clearer in that context.

 

[arcite]

No sweat, just hop on a cheap flight from London > New York and stop by the Apple Cube.

 

[applesith]

There is no reason Apple should absorb any of the VAT increase. Because they have a "high" profit margin?? You have no idea what it takes to run a company. You need high margins in order to operate. Deciding a margin is too high is complete bull and makes no sense. Complain to your giant governments that take your money.

 

[None Such]

I don't know about the USA, but here in the UK we file our tax returns in January so it's sort of on everyone's mind

April 15th is the deadline here.

 

[Porco]

I don't even bother with looking at that ratings number anymore -- why? Because you DON'T know the motivation or what is being rated what. It's easy to get confused at the motivations as this isn't a poll with specific questions.[....]Why is it the Americans who are pushing the "wrong" button to upset you Brits? Rethink, my man, rethink.

Well no, you misunderstand me. I think it's sad that people from anywhere feel motivated to find this story positive. I take your point that the positive/negative votes are difficult to assess in terms of motivation.

I did say I thought there was fault on both sides, I wasn't accusing Americans specifically of voting positive in a vindictive manner, only the latter part of my post was aimed at specific comments from some US-based posters who seem to have a chip on their shoulder.

But yes, you are right that it's quite possible the people voting positive are all doing so with great motivations and none of them are the people making xenophobic remarks. I think it unlikely there is no overlap though.

Out of all that I didn't see you once putting the blame where it belongs. It looks like politicians have a winner in VAT.

No, I wasn't trying to blame anyone, just state the opinion that I don't think Apple putting their prices up is a very good thing for anyone.

I think it's disingenuous to exclusively blame the politicians though. Of course the VAT rise is a decision they took, but is not something that has happened in a vacuum, and the politicians weren't the only ones responsible for the economic mess that has made the VAT rise deemed something that had to happen. But I don't really want to get into the political arguments on here.

 

[JayInNJ]

As others have noted, Apple charges UK consumers more before tax - so people feel that they could afford to absorb some or all of the VAT increase.

Many other retailers will be doing this.

Apple charges the price they feel consumers are willing to pay. If sales were poor, they would lower the price.

 

[Porco]

There is no reason Apple should absorb any of the VAT increase. Because they have a "high" profit margin?? You have no idea what it takes to run a company. You need high margins in order to operate. Deciding a margin is too high is complete bull and makes no sense. Complain to your giant governments that take your money.

But there is the argument that there are optimal price points for both maximising sales and profits, even at the expense of a small amount of the margin. For example. I'm not sure that putting the AppleTV up to £101 is going to make them the same money, in fact the sales might fall slightly when competing devices are around and less than £100.

I don't think anyone is really saying Apple has some kind of 'duty' (if you'll excuse the tax-related pun) to absorb the cost, rather that it could actually make better business sense to do it as an act of good faith for the consumer.

 

[Island Dog]

People blaming Apple have absolutely no clue how the real world works. Apple is a business like any other. Their job is to make money for the company and shareholders. They don't need to adsorb the cost of a tax increase.

Take it up with your politicians.

 

[fixmymac]

You are incorrect. Although business pay VAT they also claim it back, so in effect they do not pay VAT at every stage of production and shipping that adds value to a product.

Only individuals actually pays the VAT on a product.
All businesses claim back the VAT they have paid for goods and services.

I recently had to register my business for VAT.

Input VAT = VAT paid by the business for products/services.
Output VAT = VAT charged to customer for products/services.

Output VAT minus Input VAT is paid to the Government.


For example, if my business buys hard drives at £40incVAT(input), and sells that hard drive on for £40incVAT(output), Output minus Input =£0. In other words, i am due the Government nothing.

However, markup is normally added to products/services that are sold on. If i sold that same hard drive for £60incVAT(output), the Output minus Input leaves me with a surplus, which i then have to hand over to the Government every 3 months.

The greater the markup, the greater the VAT(output), the greater i am due the Government.

So, businesses DO pay VAT. Sometimes, the Output minus Input calculation returns a negative number. In this situation, the Government pay you back

 

[JTToft]

Wow, VAT is ridiculous! 20% is crazy.

- Where I live (Denmark), the VAT is at 25 %...

Here is a comparison of product prices in the US and in Denmark:

In the US, the standard white MacBook has a price point of $999.
In Denmark, it has a price point of $1,405.*

In the US, the 64 GB iPad with Wi-Fi only has a price point of $699.
In Denmark, it has a price point of $937.*

*when converting from local currency to USD.

 

[fixmymac]

- Where I live (Denmark), the VAT is at 25 %...

Here is a comparison of product prices in the US and in Denmark:

In the US, the standard white MacBook has a price point of $999.
In Denmark, it has a price point of $1,405.*

In the US, the 64 GB iPad with Wi-Fi only has a price point of $699.
In Denmark, it has a price point of $937.*

*when converting from local currency to USD.

Clarify if your converted prices include your 25% VAT ;-)

 

[Ironduke]

The LAST thing you want to tell an Englishman to do is smile.

Lose some weight Tubby

 

[Porco]

A general article, but one that I think underlines the issues this story raises:

Who, What, Why: What happens to £9.99 when VAT rises?
http://www.bbc.co.uk/news/magazine-12112206

My argument is along the lines of this (from the linked article):

The 99p factor is certainly well established. A 2008 French study of the phenomenon found that lowering the price of a pizza from 8.00 euros to 7.99 euros boosted sales by 15%.

Yes, Apple has every right to raise prices in line with the VAT hike, but it might have been wiser, at least on some products, to take the opportunity to reassess the overall pricing where the psychological advantage of a smaller-looking price might have resulted in more sales and more profit. Regardless of the consumer.

 

[fixmymac]

A general article, but one that I think underlines the issues this story raises:

Who, What, Why: What happens to £9.99 when VAT rises?
http://www.bbc.co.uk/news/magazine-12112206

My argument is along the lines of this (from the linked article):



Yes, Apple has every right to raise prices in line with the VAT hike, but it might have been wiser, at least on some products, to take the opportunity to reassess the overall pricing where the psychological advantage of a smaller-looking price might have resulted in more sales and more profit. Regardless of the consumer.

The £x.99 things is major!!