Why is iMac so much more expensive in Europe?

[macrem]

I was looking at:

iMac with Retina 5K display
+16GB RAM
+512GB SSD

US$3,272 incl. tax in CA

In Europe where I live now the same config costs € 3.129 incl. tax = $3,890 😱

Edit: the difference is almost 7x higher than the current Big Mac index for the euro area.

 

[Chippy99]

I was looking at:

iMac with Retina 5K display
+16GB RAM
+512GB SSD

US$3,272 incl. tax in CA

In Europe where I live now the same config costs € 3.129 incl. tax = $3,890 😱

Edit: the difference is almost 7x higher than the current Big Mac index for the euro area.

The main reason is that Europeans are being ripped off. That's the bottom line. As with so many goods and services, the US market is enormous and very competitive so corporations cut their costs to the bone in the US and compensate by overcharging in other regions. Apple would doubtless protest at the allegation and come up with all sorts of excuses about tax and labour costs, but that's largely a cover up and there's no getting away from the fact that we are being ripped off.

But it's not by as much as you might think - tax is a big factor too. $3,272 before state taxes is $3,072. Add in VAT at say 20% and you get $3,686. That's not a million miles away from the actual price you quote, $3,890. So Apple are ripping us off by about $200. You can blame our socialist governments for the other $400 VAT rip off!

 

[biscuitsxluv]

My friend told me in the Philippines, the iPhone is like 2 or 3 times the cost her in the US.

 

[aristobrat]

$3,272 before state taxes is $3,072. Add in VAT at say 20% and you get $3,686. That's not a million miles away from the actual price you quote, $3,890. So Apple are ripping us off by about $200.

That $200 is just the cost for that extra European product warranty you guys get. Americans have to pay extra for that. lol

 

[thundersteele]

I think the bottom line is that a company has to optimise their revenue and earnings, and they will choose a price point that will maximise either of those, or both. That price point can be different for different regions, which might just mean that customers are willing to pay more for electronics in Europe than in the US.
Chippy99 calls this "rip-off", but I think it is just modern economics. Airlines do the same, they sell each seat for a different price essentially, despite providing the same service. Or have you ever wondered when you get a 2-for-1 deal in the supermarket, why you pay twice the amount usually?

 

[MRrainer]

I was looking at:

iMac with Retina 5K display
+16GB RAM
+512GB SSD

US$3,272 incl. tax in CA

In Europe where I live now the same config costs € 3.129 incl. tax = $3,890 😱

Edit: the difference is almost 7x higher than the current Big Mac index for the euro area.

Here in Switzerland, the base 5k iMac with 16GB RAM + 512 GB SSD is 3349 CHF, with tax.
That translates to 3483 USD.

But here in .ch, VAT is just 8%, where in .nl, it's apparently 21%. Yikes.

If you subtract the 21% tax from your price and 8% from my Swiss price you'll end up with pretty much the same amount.

Countries depend on tax-money like a crack-addict depends on crack.
Tax-money is to countries what crack is to addicts.
Thus, chances of that VAT-rate going down anytime in our lifetime: nil.
Expect it to rise to 25% over the next years (in all of .eu).

 

[roberthallin]

Because... Well, a lot of reasons.

Depending on which country in Europe you're living in (there's 50 of us...) you have to pay their taxes and social fees, which are generally higher since a lot of them have a lot better social security systems etc in place than the U.S.

In Sweden for instance, since this is what I'm most familiar with, we pay a lot of taxes... On everything. Depending on how much you make you pay up to 60% (normally around 35/40%) of your salary in income tax, and everything that is being sold here has a tax called "moms" on it, which is somewhere around 33%. Meaning for every product that costs 100$, 33$ goes straight to the government. This is comparable to VAT, but it's not entirely the same thing. So businesses needs to charge more for a product than in a country where there's a lower tax, in order to make the same profit.

In return for this there's universal physical and mental healthcare which includes a guarantee that you never pay more than ~200$/year for medicine, free education for everyone (you even get paid for getting a PhD), daycare, state pension, and an endless list of things that the state can do for you if you need them, such as getting help with your rent if you have a low income, getting an apartment, getting (proper) wellfare if you don't have a job etc etc etc. Also, all this is available to every citizen, regardless of how much the individual pays in tax.

However, to those who live and work here the prices aren't expensive in the same way that they are to those who doesn't work and live under the same conditions. For instance, Norway is incredibly expensive for anyone who doesn't live there, but in relation to the average norwegian salary it's not as bad as it might look at first for say.. a Swede 🙂

So yeah, basically it depends of on the sort of political system that is in place as well as which country you're living in with all the regional variations that exists. It also depends on wether or not the country you live in is part of the EU.

As for being "ripped off", that's something you might often hear from someone who doesn't understand what socialism is or why it exists, or maybe they don't personally get to use the money they pay in taxes and doesn't take any joy in knowing that the money is helping people less fortunate than themselves, or the country as a whole.

Personally, I love socialism 🙂

 

[iSayuSay]

My friend told me in the Philippines, the iPhone is like 2 or 3 times the cost her in the US.

It's pretty much the same in many countries where iPhone and Apple devices used as status symbol rather than subsidized commodity.

Just imagine iphone no longer tied to 2 years contract in the US. Will it ever be the same again? Will you see a random janitor across the street using an iphone 6 while you still swinging an old iPhone 5?

 

[skaertus]

Well, the base retina iMac here in Brazil is over US$ 5,000. The BASE model. I wish I had the prices you have in Europe.

 

[dyn]

The main reason is that Europeans are being ripped off. That's the bottom line. As with so many goods and services, the US market is enormous and very competitive so corporations cut their costs to the bone in the US and compensate by overcharging in other regions.

Which is absolutely not true at all. Go ahead, order a bottle of ink from P.W. Akkerman in The Hague and you'll see why. If you want to sent it to the USA it will cost you more than 20 euros to do so. More than what the product costs.

The reason for this is really simple: rules, regulations and taxes. One simply does not import nor export a product to whatever country in the world from whatever country in the world. It is nearly impossible to import rare earth metals from China. Why? Because of rules and regulations that China imposes on these things. Since these are rare and difficult to come by they are also very costly. That's why a customised Mac ships from China and not from Apple USA.

These rules, regulations and taxes are all meant to protect ones own interests (economy, jobs and so on). Chinese companies are dumping solar panels on the markets right now for very low prices. They can because the Chinese government is backing them. This causes problems for local manufacturers elsewhere because they don't have that backing and can't lower their prices. Lowering their prices would make them go bankrupt, letting the Chinese dump them for lower prices does the same thing. The EU wanted to do something about that and raise the prices of the Chinese panels. Except that causes a big problem in countries like the Netherlands. A lot of people are buying panels because they are cheap and they are hiring other companies to install them. If the prices go up then people won't buy the panels and not hire those companies. Those companies will go bankrupt. So they settled somewhere in the middle.

If the EU didn't do this then a lot of people would have lost their jobs due to companies going bankrupt. Unfortunately these things are also used in politics. The most known example are the UN resolutions against countries like North Korea and (more recently) Russia. And yes, companies will find a way to circumvent those but it'll drive the cost of the product.

This means that for some products you pay more in your own country than abroad. This principe applies to every country in the world including the USA: Bush slaps tariffs on steel imports (exactly the same as the solar panel example from the EU).

 

[Chippy99]

Which is absolutely not true at all. Go ahead, order a bottle of ink from P.W. Akkerman in The Hague and you'll see why. If you want to sent it to the USA it will cost you more than 20 euros to do so. More than what the product costs.

The reason for this is really simple: rules, regulations and taxes. One simply does not import nor export a product to whatever country in the world from whatever country in the world. It is nearly impossible to import rare earth metals from China. Why? Because of rules and regulations that China imposes on these things. Since these are rare and difficult to come by they are also very costly. That's why a customised Mac ships from China and not from Apple USA.

These rules, regulations and taxes are all meant to protect ones own interests (economy, jobs and so on). Chinese companies are dumping solar panels on the markets right now for very low prices. They can because the Chinese government is backing them. This causes problems for local manufacturers elsewhere because they don't have that backing and can't lower their prices. Lowering their prices would make them go bankrupt, letting the Chinese dump them for lower prices does the same thing. The EU wanted to do something about that and raise the prices of the Chinese panels. Except that causes a big problem in countries like the Netherlands. A lot of people are buying panels because they are cheap and they are hiring other companies to install them. If the prices go up then people won't buy the panels and not hire those companies. Those companies will go bankrupt. So they settled somewhere in the middle.

If the EU didn't do this then a lot of people would have lost their jobs due to companies going bankrupt. Unfortunately these things are also used in politics. The most known example are the UN resolutions against countries like North Korea and (more recently) Russia. And yes, companies will find a way to circumvent those but it'll drive the cost of the product.

This means that for some products you pay more in your own country than abroad. This principe applies to every country in the world including the USA: Bush slaps tariffs on steel imports (exactly the same as the solar panel example from the EU).

You raise some interesting points, but without pouring over it again, I fail to see how ANY of the above has got anything to do with Apple pricing in Europe.

The retail price is set by Apple bearing in mind the cost of the product, the cost of shipping it, the amount tax that's charged and other factors internal to Apple, not least how much profit they wish to make. Nothing in your above list is relevant as far as I can see.

 

[Chippy99]

Personally, I love socialism 🙂

I have no problem with it in principle, it's the practical implementation and actually making it work that I have issue with.

Let me give you a very real and practical example, here in the UK. 11 weeks ago, my 75 year old father in law fell over and broke his hip. After 3 operations, he's still in hospital. The first operation went well but the bones didn't knit properly so he had to have another operation to patch that up (in some way we never got to the bottom of) and then a 3rd to do the job again properly.

But the 3rd was over 6 weeks ago and he's still in hospital. The reason is because a total lack of any imperative to get him rehabilitated, mobile again and back at home. A lack of coordination of all the necessary support services - people turning up to do tests and assessments that then can't be done because someone else hasn't yet done a necessary preceeding step of some sort, for example.

There is just no sense of urgency and no-one cares how long he's in, nor how much it costs. I would imagine the bill now must be nearly £100,000 and no-one cares.

Had his operation been subcontracted to a private organisation on a fixed fee basis, they would have had him up and out weeks ago, a far better outcome for all concerned, not least my father-in-law.

Now if you want to pay 60% income tax and 25% VAT to pay for this sort of nonsense, go ahead. I do not.

 

[Sciuriware]

A lot of truth in the posts above.
But: some things are more expensive here (.nl), others are less expensive.
Did you ever buy a pound of Dutch cheese in Hanoi?

Let's be happy that we can afford an iMac today.
My first computer was a BURROUGHS 4000 at $125 000 ....
... well, my employer bought it.
;JOOP!

 

[pcd109]

I was looking at:

iMac with Retina 5K display
+16GB RAM
+512GB SSD

US$3,272 incl. tax in CA

In Europe where I live now the same config costs € 3.129 incl. tax = $3,890 😱

Edit: the difference is almost 7x higher than the current Big Mac index for the euro area.

Well, i raised the same question myself many times. BUT, let's not being hypocrite. The living standard in EU is very high, as well as social security(there is one comment from a Stockholm based user witch pretty much nails it). I just done 2k in less then 1 week(let's say 1 week, ok) so i can't complain about the prices, but i still do. Why? Because i don't like the FEELING of being ripped-off. In Romania(EU, where i leave) everyone complains about 'low income' and somehow the vast majority have latest cars, Greece vacations, endless hours in pubs and so on.... Plus, if you don't do anything, you apply for social care and ... get paid. Incredibly not?(why i keep working so much hours it's a mystery). But this is how is done in EU...... Plus the state charges you an arm and a leg(24% VAT) plus 16% taxes for profit(this is already 40% of your income by the way) plus, plus, plus..... BUT, after taking off all the taxes Apple is STILL charging between 7-15% in plus in EU(varies with the country). Why? First extended care(2 years standard vs just 1 in US), then transportation and higher taxes in EU. If you think Apple is ripping us off, then you just did not seen what the software companies are doing to us. Autodesk charges us for Maya 2 times the US price(5,2k in Eu vs 3,6k in US). And this is software delivered electronically, so no transportation nothing..... So, i think Apple is not the worst by far.

 

[xxorx]

You should see the iMac brazilian's price. It's so sad.

iMac 5K Retina is in 13,000 reais (like 6/7.000 dollars)

MacBook Pro Retina 13 is kinda 2/3k dollars.

iPhone is more expensive than MacBook Air 13". 🙁

 

[roberthallin]

Now if you want to pay 60% income tax and 25% VAT to pay for this sort of nonsense, go ahead. I do not.

I'm sorry to hear that your family's situation isn't being handled better, but to simplify the entire situation by saying that what we're paying for is "this sort of nonsense" is by no stretch the truth of the situation. To talk specifics; I myself have had to struggle for getting the care that I've needed, I have epilepsy and have been trying out different medicines and doctors, which has basically robbed me of the entire past year and a half due to quite crippling side-effects that would not be taken seriously.

However, I do have a bachelor degree in art history and philosophy, the (finally) right medicine I need for my illness, a number that I can call if I'm ever unfortunate in any way that will get me help without checking that I've got the insurance/money to cover it, a nice apartment and financial aid in starting my own business.

The reason I say I love socialism is not that I love funding the situations that can arise where people fall between the chairs, it's because the entire country that I live in would not be what it is without all the positives that it has brought, and is bringing, to everyone who is a part of this system. It's of course not perfect, less so in the UK than Sweden from what i gather, but it is the most viable alternative that exists when the desired outcome is well-being and equal opportunities for everyone, not just those who can afford the fixed fee.

To me, the way to make things better would be to improve the socialist system so that fewer people have to suffer through things like what you bring up or what I've been dealing with, not abandoning it for a system that favours only those who can afford it's favours.

 

[Chippy99]

@Robert, I respect your views (although I don't agree with them). But let's not debate this further here - it's WAY offtopic ;-)

I don't think there's a "other topics" board here, or I would carry on there.

Anyway, best wishes

Chip

 

[leman]

Included tax, higher social payments, better warranty stuff like that.

In Switzerland, that model is 3349 CHF, which is around $3470 — similar as the american price + 8% Swiss VAT (actually, its even cheaper than the US price).

Bottomline: the Macs are NOT more expensive in Europe.

 

[roberthallin]

@Robert, I respect your views (although I don't agree with them). But let's not debate this further here - it's WAY offtopic ;-)

I don't think there's a "other topics" board here, or I would carry on there.

Anyway, best wishes

Chip

Haha, I absolutely agree. I could feel the train derailing as I wrote that last post.

Hope things work out for you and yours, happy holidays.

 

[toddzrx]

It's funny how this topic comes up in the various sub-forums for all the different Apple products every once in a while.

Forget all the economic jibber-jabber: differences in cost come down to exchange rates, taxes, and for many European countries specifically, consumer protection laws that require a stouter warranty than what we in the States get. If you take the US price for a given Apple product, add Apple Care to it, calculate the exchange rate for your local currency, and add in your home tax rate, you'll probably come up with something really close to the actual sales price of that product at your local Apple Store.

Oh, and don't forget this simple oversight: listed prices in the US almost never include sales taxes for any product (because they're different from state to state), so we here in the US pay more than, say, the $99 Apple displays as the cost for the Apple TV. Living in Arizona, I'd pay $106.55 for it.

Bottom line: you're probably not getting ripped off when you run all the numbers.

 

[dyn]

You raise some interesting points, but without pouring over it again, I fail to see how ANY of the above has got anything to do with Apple pricing in Europe.

Nobody is above the law, not even Apple. Apple has to obey international law and regulations. These law and regulations affect Apples pricing due to things like taxes and such. These things change over time. Other things like value of currencies also change and those changes affect other parts like certain percentages, interest rates and so on.

Or simply put: doing business internationally is rather complex. Things are not fixed and are continuously moving. Companies try to account for that which means that pricing in some countries are higher than in others for the same product. That's how the global economy works.

 

[thundersteele]

In Switzerland, that model is 3349 CHF, which is around $3470 — similar as the american price + 8% Swiss VAT (actually, its even cheaper than the US price).

Bottomline: the Macs are NOT more expensive in Europe.

Not sure why you say it is cheaper, because it is not, but this again highlights that the difference is not that big.

One thing to consider is that in the last 3-6 months, the dollar increased in value compared to CHF and Euro by about 10%. So the price difference is smaller than usual at the moment, and I actually start to wonder if Apple will increase prices in the EU (and CH) to get back to their regular margin.

 

[leman]

Not sure why you say it is cheaper, because it is not, but this again highlights that the difference is not that big.

You are right. I didn't notice that 'incl. tax' part in OP's post. I though that was the price without tax. So true, its indeed more expensive here.

 

[Mikael H]

Because... Well, a lot of reasons.

Depending on which country in Europe you're living in (there's 50 of us...) you have to pay their taxes and social fees, which are generally higher since a lot of them have a lot better social security systems etc in place than the U.S.

In Sweden for instance, since this is what I'm most familiar with, we pay a lot of taxes... On everything. Depending on how much you make you pay up to 60% (normally around 35/40%) of your salary in income tax, and everything that is being sold here has a tax called "moms" on it, which is somewhere around 33%. Meaning for every product that costs 100$, 33$ goes straight to the government. This is comparable to VAT, but it's not entirely the same thing. So businesses needs to charge more for a product than in a country where there's a lower tax, in order to make the same profit.

I'd say this is oversimplified.
Sweden, like many other countries, has several tax "levels" depending on how much you make. Up to a threshold income, you pay a certain percentage in tax. Above such a threshold, you pay the next higher percentage, but only on the amount that exceeds the threshold value.

Swedish "moms" is what's called VAT in most of the world. The Swedish VAT is 25%, not 33%.

---

To answer the OP:
To get the price you'd pay in a European country, do this:
- Take the US price excluding taxes.
- Add freight from the US to your location.
- Add your country's customs tariff for the kind of gear you've bought (usually between 6 and 12 % for electronics).
- Add your country's VAT to ([the purchase amount] + [the amount paid in customs]).

The price difference, once you've compensated for currency fluctuations, is what you're being "ripped off" for by the seller. The rest is what you pay for living where you live.

 

[Chippy99]

Nobody is above the law, not even Apple. Apple has to obey international law and regulations.

Who on earth suggested otherwise?

These law and regulations affect Apples pricing due to things like taxes and such. These things change over time. Other things like value of currencies also change and those changes affect other parts like certain percentages, interest rates and so on.

Or simply put: doing business internationally is rather complex. Things are not fixed and are continuously moving. Companies try to account for that which means that pricing in some countries are higher than in others for the same product. That's how the global economy works.

Thanks for the lesson ;-)

However, if we accept for the sake of argument your position that these unspecified costs of yours are varying constantly and wildly, then even so, that is no justification for prices being constantly and consistently too high.

Mikael H sums it up perfectly, above. And it's about $200 on the figures quoted by the OP. $200 that Apple are choosing to overcharge by, in order to subsidise less profitable (more competitive) markets.