Why British iMac price increase is fair

[HyperSnake]

The big thing on the forums yesterday and today was the price increase on the iMacs in some European countries, but mainly Britain. The British are extremely angry at Apple, yet the price increase is only fair. Look at the following example.

US baseline iMac price: $1199 (excluding tax)
UK baseline iMac price: £950 (including VAT)

The VAT is not Apple's fault so we will deduct that in order to make a fair test. The British VAT is 15%.

£950 / 1.15 = £826,1

We cannot compare £ to $ so we will convert the un-taxed British price to $ using the most current exchange rate 1 : 1.414, $ : £.

£826 * 1.414 = $1168,1!


CONCLUSION: The price increases are only fair. Before VAT the British are paying less than the Americans are before tax. What makes it more expensive in Britain is because of the 15% VAT which Apple can do nothing about. Looking at the price, Apple has already deducted what equals almost $30 to compensate for the high VAT. I guess $30 is the highest amount Apple wants to deduct to compensate for the VAT in Europe and still keep their income per sold unit identical to that of the US.

If I missed something please let me know.

EDIT: edesignuk has provided me with the price of the baseline iMac on the British Apple Store before the upgrade. Here is the *shocking* calculation of the prices before the upgrade:

US baseline iMac price: $1199 (excluding tax)
UK baseline iMac price: £750 (including VAT)

//deduct VAT
£750 / 1,15 = £652,2

//convert to $
£652,2 * 1.414 = $922,2!

S*** man even I didn't expect it would be that low! The British were getting the iMacs almost $300(before VAT) cheaper than the Americans were! If anybody thinks it is unfair that the British are now paying the same as everybody else compared to the fact that they have been getting a much lower price for a long time, then please post a reply along with reasons why it is unfair.

EDIT EDIT: The right method is now being used to find the un-taxed amount.

- Ben

 

[edesignuk]

Regardless of any of that, a few days ago you could get an iMac for £750 (if memory serves), now you'll have to cough up an additional £200. That is bollocks.

 

[kastenbrust]

They should have increased the price gradually, £50 every 2 weeks for a 2 month period.

 

[daneoni]

You didnt crush anything...merely tried to justify Apple's unjustifiable prices

 

[iBlue]

They should have increased the price gradually, £50 every 2 weeks for a 2 month period.

Is that like the financial equivalent of applying a bit of lube before really going for it?

 

[cmcbridejr]

They should have increased the price gradually, £50 every 2 weeks for a 2 month period.

Yeah, that would not have pissed of anyone.

Imagine the press release.... this week, Apple raises price of iMac in tough economy. Oh, and they will be doing it again and again every few weeks for the next few months. Must buy now before it is too late!

 

[kastenbrust]

What? Is that like the financial equivalent of applying a bit of lube before really going for it?

pretty much, maybe over a longer period like 4 or 5 months would be better, hitting people with a £200 jump is too obvious, and has drawn huge media attention. See what happens when Steve isn't there to lube things up....

 

[LouisBlack]

Is that like the financial equivalent of applying a bit of lube before really going for it?

Ha ha!

Ahem... I understand that the pound is doing horribly at the moment and our VAT is higher than a lot of countries but as edesignuk points out - anyone who was planning on buying a low level iMac but waited for the updates will have to fork out an extra £200. And anyone looking at the top end will have to pay over £400 extra!

Our refurb store is never as full as the U.S. store as well so we have less of an chance to pick up an last gen model.

 

[Arran]

<very interesting -and surprising- analysis deleted>

If I missed something please let me know.

- Ben

Americans generally (or at least those who inhabit the internet) have higher disposable income?

Of course, I believe our rulers are working that issue.

 

[kastenbrust]

I understand that the pound is doing horribly at the moment and our VAT is higher than a lot of countries

Not really...theres an EU law that says no EU country can drop its VAT lower than 15%, thats why the government cant make it lower, even though they want to.
http://en.wikipedia.org/wiki/Value_added_tax

 

[Arran]

...Our refurb store is never as full as the U.S. store as well so we have less of an chance to pick up an last gen model.

Sniff. Sniff. Do I smell an import/export opportunity here?

Remember grey imports?

 

[QCassidy352]

Regardless of any of that, a few days ago you could get an iMac for £750 (if memory serves), now you'll have to cough up an additional £200. That is bollocks.

The pound used to be worth $1.90. Now it's worth $1.40. Do you really think Apple can or should ignore that?

I realize that a huge price bump all at once seems harsh, but we all know apple doesn't adjust prices except when they change the lineup. Usually that means prices don't fall as the technology gets older; in this case, it means prices didn't rise mid-cycle even though the conversion rate warranted it.

Bottom line is you UK folk aren't paying any more for your imacs than we Americans are (unless you take in to account the VAT, but that's a whole other issue).

 

[HyperSnake]

......Our refurb store is never as full as the U.S. store as well so we have less of an chance to pick up an last gen model.

You are in a group of very few countries in which Apple has a refurb store. All the countries where you can only buy Apple items through the Online Store or 3rd Party retailers doesn't have Apple Refurb Stores.

 

[FrancoZ]

your calculations are all wrong i'm afraid

£950 untaxed is 950/1.15 = £826

this is because its value ADDED tax, it is 15% on top of the base price, not 15% of the end price.

£826 * 1.414 = $1168

i know this is even closer to the American prices, but the calculations are wrong. This isn't a nasty post, its just a bit misleading sorry

 

[jbrenn]

sale tax

for the people not from the US don't forget sales tax most states have to pay sales tax in texas it is 8.25%.

 

[HyperSnake]

for the people not from the US don't forget sales tax most states have to pay sales tax in texas it is 8.25%.

I know that which is why I have not added tax or VAT to the results - different states have different taxes.

your calculations are all wrong i'm afraid

£950 untaxed is 950/1.15 = £826

this is because its value ADDED tax, it is 15% on top of the base price, not 15% of the end price.

£826 * 1.414 = $1168

i know this is even closer to the American prices, but the calculations are wrong. This isn't a nasty post, its just a bit misleading sorry

Fixing it now, sorry

 

[Eidorian]

You didnt crush anything...merely tried to justify Apple's unjustifiable prices

Why do people do this?

Do they need to feel better about their Mac purchase or something?

 

[Tomorrow]

The pound used to be worth $1.90. Now it's worth $1.40. Do you really think Apple can or should ignore that?

I think this is most likely the single biggest factor in the "jump" in price. To the surprise of many, the US$ has actually made some gains in recent months.

 

[cb31]

It doesn't really matter, Apple can and do charge what they like, fair or not.

However I can purchase what I like and will not now be purchasing a 24" iMac and will instead buy a generic PC which will be a lot cheaper and more powerful. Turn it into a hackintosh and Apple will be seeing nothing of my money.

I've converted a lot of people over the last few years to Apple but couldn't justify it now, especially seeing as Windows 7 looks great and is just around the corner. I hope Apple see the light or long-term this could turn out bad for them.

 

[FrancoZ]

Fixing it now, sorry

its alright its pretty confusing, but its my job to understand tax!

 

[HyperSnake]

its alright its pretty confusing, but its my job to understand tax!

Thank you for pointing out the mistake which has now been fixed!

I've converted a lot of people over the last few years to Apple but couldn't justify it now, especially seeing as Windows 7 looks great and is just around the corner. I hope Apple see the light or long-term this could turn out bad for them.

It was already turning out bad for them. They would have lost a lot more money by selling extra-ordinarily cheap iMacs to the British than they will by increasing prices.

 

[Abstract]

I think this assessment is fair. No, it's not good for UK members because no matter what is said, they're paying more GBP for their Apple products. However, nobody can say this isn't a fair move. Apple isn't raising prices to drive profit. They're raising prices in reaction to changes in the relative value of currency.

Same thing happened in Australia, but what do you expect when your currency's value drops from $0.90 - $1 to the US dollar, back down to $0.65???

 

[gnasher729]

It was already turning out bad for them. They would have lost a lot more money by selling extra-ordinarily cheap iMacs to the British than they will by increasing prices.

I have seen people on MacRumors enquiring how to purchase a Macintosh from the UK. I could imagine that a week ago, many Europeans could save a lot of money by buying a Macintosh in the UK,

 

[HyperSnake]

I have seen people on MacRumors enquiring how to purchase a Macintosh from the UK. I could imagine that a week ago, many Europeans could save a lot of money by buying a Macintosh in the UK,

I almost bought a mac off amazon.co.uk, well not anymore!

 

[ClaphamChris]

I wouldn't say it's anything other than fair. But it does make the iMac's really bad value for money here. Had the upgrade been a bit more substantial I think it would have lessened the impact.

I've just bought a previous gen 3.06 with a 1TB HDD. Cost me £1506.

As opposed to the updated machine which is £1799. So is 2GB of ram, a marginally better graphics card and DDR3 ram worth £300 to me? Of course not. Just makes an already expensive machine look overpriced

I feel differently about the MacPros - the addition of Nehalem adds real value. But the iMac update adds little other than a price hike.

Yes, it's fair. But wouldn't be surprised if Apple desktop sales tank here. If being in deep recession wasn't enough, this price hike with no added value will do it.